UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 10-Q

____________________________

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April ~~4, 2021~~3, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 001-11796

____________________________

Masonite International Corporation

(Exact name of registrant as specified in its charter)

____________________________


British Columbia, Canada						98-0377314
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2771 Rutherford Road

Concord, Ontario L4K 2N6 Canada

(Address of principal executive offices)

(800) 895-2723

(Registrant's telephone number, including area code)

____________________________


Securities registered pursuant to Section 12(b) of the Act:
Common Stock (no par value)	DOOR	New York Stock Exchange
(Title of class)	(Trading symbol)	(Name of exchange on which registered)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

The registrant had outstanding ~~24,500,806~~22,564,956 shares of Common Stock, no par value, as of ~~April 30, 2021.~~May 2, 2022.

MASONITE INTERNATIONAL CORPORATION

INDEX TO QUARTERLY REPORT ON FORM 10-Q

April ~~4, 2021~~3, 2022

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the federal securities laws, including, without limitation, statements concerning the conditions in our industry, our operations, our economic performance and financial condition, including, in particular, statements relating to our business and growth strategy and product development efforts under "Management's Discussion and Analysis of Financial Condition and Results of Operations." Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as "may," "might," "could," "will," "would," "should," "expect," "believes," "outlook," "predict," "forecast," "objective," "remain," "anticipate," "estimate," "potential," "continue," "plan," "project," "targeting," and other similar expressions. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. These forward-looking statements are based on estimates and assumptions by our management that, although we believe to be reasonable, are inherently uncertain and subject to a number of risks and uncertainties. These risks and uncertainties include, without limitation, those identified under "Risk Factors" in our Annual Report on Form 10-K for the year ended January ~~3, 2021,~~2, 2022, subsequent reports on Form 10-Q, and elsewhere in this Quarterly Report.

The following list represents some, but not necessarily all, of the factors that could cause actual results to differ from historical results or those anticipated or predicted by these forward-looking statements:

•downward trends in our end markets and in economic conditions;

•reduced levels of residential new construction; residential repair, renovation and remodeling; and non-residential building construction activity due to increases in mortgage rates, changes in mortgage interest deductions and related tax changes and reduced availability of financing;

•competition;

•the continued success of, and our ability to maintain relationships with, certain key customers in light of customer concentration and consolidation;

•our ability to accurately anticipate demand for our ~~products~~products;

•impacts on our business including ~~seasonality;~~seasonality, weather and climate change;

•scale and scope of the ongoing coronavirus ("COVID-19") pandemic and its impact on our operations, customer demand and supply chain;

•increases in prices of raw materials and fuel;

•tariffs and evolving trade policy and friction between the United States and other countries, including China, and the impact of anti-dumping and countervailing duties;

•increases in labor costs, the availability of labor or labor relations (i.e., disruptions, strikes or work stoppages);

•our ability to manage our operations including potential disruptions, manufacturing realignments (including related restructuring charges) and customer credit risk;

•product liability claims and product recalls;

•our ability to generate sufficient cash flows to fund our capital expenditure requirements, to meet our pension obligations and to meet our debt service obligations, including our obligations under our senior notes and our asset-based revolving credit facility ("ABL Facility");

•limitations on operating our business as a result of covenant restrictions under our existing and future indebtedness, including our senior notes and ABL Facility;

•fluctuating foreign exchange and interest rates;

•our ability to replace our expiring patents and to innovate, keep pace with technological developments and successfully integrate acquisitions;

•the continuous operation of our information technology and enterprise resource planning systems and management of potential cyber security threats and attacks;

•political, economic and other risks that arise from operating a multinational business;

•uncertainty relating to the United Kingdom's exit from the European Union;

•retention of key management personnel; and

•environmental and other government regulations, including the United States Foreign Corrupt Practices Act ("FCPA"), and any changes in such regulations.

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We caution you that the foregoing list of important factors is not all-inclusive. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this Quarterly Report may not in fact occur. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

~~Table of Contents~~

The Company may use its website and/or social media outlets, such as LinkedIn, as distribution channels of material company information. Financial and other important information regarding the Company is routinely posted on and accessible through the Company’s website at http://investor.masonite.com and its LinkedIn page at https://www.linkedin.com/company/masonitedoors/mycompany/. In addition, you may automatically receive email alerts and other information about the Company when you enroll your email address by visiting the “Email Alerts” section at http://investor.masonite.com.

iii

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PART I – FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

MASONITE INTERNATIONAL CORPORATION

Condensed Consolidated Statements of Income and Comprehensive Income ~~(Loss)~~

(In thousands of U.S. dollars, except per share amounts)

(Unaudited)

Three Months Ended
April 4, 2021 March 29, 2020
Net sales $ 646,337 $ 551,228
Cost of goods sold 487,699 416,947
Gross profit 158,638 134,281
Selling, general and administration expenses 83,631 80,333
Restructuring costs 1,643 1,941
Operating income 73,364 52,007
Interest expense, net 11,946 11,282
Other (income) expense, net (1,343) 49
Income before income tax expense 62,761 40,676
Income tax expense 14,613 9,639
Net income 48,148 31,037
Less: net income attributable to non-controlling interests 1,167 1,152
Net income attributable to Masonite $ 46,981 $ 29,885
Basic earnings per common share attributable to Masonite $ 1.92 $ 1.20
Diluted earnings per common share attributable to Masonite $ 1.89 $ 1.19
Comprehensive income (loss):
Net income $ 48,148 $ 31,037
Other comprehensive income (loss):
Foreign currency translation gain (loss) 2,228 (38,687)
Amortization of actuarial net losses 334 173
Income tax expense related to other comprehensive income (loss) (54) (89)
Other comprehensive income (loss), net of tax: 2,508 (38,603)
Comprehensive income (loss) 50,656 (7,566)
Less: comprehensive income attributable to non-controlling interests 1,338 573
Comprehensive income (loss) attributable to Masonite $ 49,318 $ (8,139)


	Three Months Ended
		April 3, 2022		April 4, 2021
Net sales		$	726,217	$	646,337
Cost of goods sold		541,968		487,699
Gross profit		184,249		158,638
Selling, general and administration expenses		83,246		83,631
Restructuring (benefit) costs		(19)		1,643


Operating income		101,022		73,364
Interest expense, net		10,239		11,946

Other (income) expense, net		(1,415)		(1,343)
Income before income tax expense		92,198		62,761
Income tax expense		23,477		14,613
Net income		68,721		48,148
Less: net income attributable to non-controlling interests		1,139		1,167
Net income attributable to Masonite		$	67,582	$	46,981

Basic earnings per common share attributable to Masonite		$	2.93	$	1.92
Diluted earnings per common share attributable to Masonite		$	2.89	$	1.89

Comprehensive income:
Net income		$	68,721	$	48,148
Other comprehensive (loss) income:
Foreign currency translation (loss) gain		(2,105)		2,228


Amortization of actuarial net losses		6		334
Income tax benefit (expense) related to other comprehensive (loss) income		10		(54)
Other comprehensive (loss) income, net of tax:		(2,089)		2,508
Comprehensive income		66,632		50,656
Less: comprehensive income attributable to non-controlling interests		1,281		1,338
Comprehensive income attributable to Masonite		$	65,351	$	49,318

See accompanying notes to the condensed consolidated financial statements.

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MASONITE INTERNATIONAL CORPORATION

Condensed Consolidated Balance Sheets

(In thousands of U.S. dollars, except share amounts)

(Unaudited)

ASSETS April 4, 2021 January 3, 2021
Current assets:
Cash and cash equivalents $ 323,198 $ 364,674
Restricted cash 10,560 10,560
Accounts receivable, net 365,396 290,508
Inventories, net 267,230 260,962
Prepaid expenses and other assets 37,497 42,538
Income taxes receivable 5,498 1,124
Total current assets 1,009,379 970,366
Property, plant and equipment, net 616,872 625,126
Operating lease right-of-use assets 152,881 146,806
Investment in equity investees 14,923 14,636
Goodwill 139,728 138,692
Intangible assets, net 165,620 169,392
Deferred income taxes 20,448 25,331
Other assets 50,801 47,411
Total assets $ 2,170,652 $ 2,137,760
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 114,259 $ 97,211
Accrued expenses 250,058 277,716
Income taxes payable 4,395 11,086
Total current liabilities 368,712 386,013
Long-term debt 791,628 792,242
Long-term operating lease liabilities 140,642 136,235
Deferred income taxes 77,967 73,073
Other liabilities 54,550 55,080
Total liabilities 1,433,499 1,442,643
Commitments and Contingencies (Note 7) 0 0
Equity:
Share capital: unlimited shares authorized, no par value, 24,500,706 and 24,422,934 shares issued and outstanding as of April 4, 2021, and January 3, 2021, respectively 561,776 552,969
Additional paid-in capital 214,689 223,666
Accumulated earnings 59,712 20,385
Accumulated other comprehensive loss (109,726) (112,063)
Total equity attributable to Masonite 726,451 684,957
Equity attributable to non-controlling interests 10,702 10,160
Total equity 737,153 695,117
Total liabilities and equity $ 2,170,652 $ 2,137,760


ASSETS	April 3, 2022		January 2, 2022
Current assets:
Cash and cash equivalents	$	183,526	$	381,395
Restricted cash	11,098		10,110
Accounts receivable, net	408,916		343,414
Inventories, net	405,617		347,476
Prepaid expenses and other assets	50,734		50,399
Income taxes receivable	2,471		1,332
Total current assets	1,062,362		1,134,126
Property, plant and equipment, net	619,803		626,797
Operating lease right-of-use assets	169,427		176,445
Investment in equity investees	16,681		14,994
Goodwill	75,402		77,102
Intangible assets, net	145,763		150,487
Deferred income taxes	21,013		20,764
Other assets	46,677		45,903
Total assets	$	2,157,128	$	2,246,618

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	134,108	$	138,788
Accrued expenses	226,093		237,300
Income taxes payable	11,982		8,551
Total current liabilities	372,183		384,639
Long-term debt	866,041		865,721

Long-term operating lease liabilities	158,859		165,670
Deferred income taxes	84,530		77,936
Other liabilities	49,068		52,874
Total liabilities	1,530,681		1,546,840
Commitments and Contingencies (Note 7)	0		0
Equity:
Share capital: unlimited shares authorized, no par value, 22,564,956 and 23,623,887 shares issued and outstanding as of April 3, 2022, and January 2, 2022, respectively	527,386		543,400
Additional paid-in capital	194,459		222,177
(Accumulated deficit) retained earnings	(2,023)		24,244
Accumulated other comprehensive loss	(104,810)		(101,582)
Total equity attributable to Masonite	615,012		688,239
Equity attributable to non-controlling interests	11,435		11,539
Total equity	626,447		699,778
Total liabilities and equity	$	2,157,128	$	2,246,618

See accompanying notes to the condensed consolidated financial statements.

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MASONITE INTERNATIONAL CORPORATION

Condensed Consolidated Statements of Changes in Equity

(In thousands of U.S. dollars, except share amounts)

(Unaudited)

Three Months Ended
April 4, 2021 March 29, 2020
Total equity, beginning of period $ 695,117 $ 636,862
Share capital:
Beginning of period 552,969 558,514
Common shares issued for delivery of share based awards 9,931 5,490
Common shares issued under employee stock purchase plan 824 708
Common shares repurchased and retired (1,948) (12,729)
End of period 561,776 551,983
Additional paid-in capital:
Beginning of period 223,666 216,584
Share based compensation expense 4,418 3,470
Common shares issued for delivery of share based awards (9,931) (5,490)
Common shares withheld to cover income taxes payable due to delivery of share based awards (3,281) (1,427)
Common shares issued under employee stock purchase plan (183) (311)
End of period 214,689 212,826
Accumulated earnings (deficit):
Beginning of period 20,385 (20,047)
Net income attributable to Masonite 46,981 29,885
Common shares repurchased and retired (7,654) (22,041)
End of period 59,712 (12,203)
Accumulated other comprehensive loss:
Beginning of period (112,063) (130,169)
Other comprehensive income (loss) attributable to Masonite, net of tax 2,337 (38,024)
End of period (109,726) (168,193)
Equity attributable to non-controlling interests:
Beginning of period 10,160 11,980
Net income attributable to non-controlling interests 1,167 1,152
Other comprehensive income (loss) attributable to non-controlling interests, net of tax 171 (579)
Dividends to non-controlling interests (796) (710)
End of period 10,702 11,843
Total equity, end of period $ 737,153 $ 596,256
Common shares outstanding:
Beginning of period 24,422,934 24,869,921
Common shares issued for delivery of share based awards 154,458 134,911
Common shares issued under employee stock purchase plan 8,297 9,426
Common shares repurchased and retired (84,983) (567,271)
End of period 24,500,706 24,446,987


	Three Months Ended
		April 3, 2022		April 4, 2021
Total equity, beginning of period		$	699,778	$	695,117
Share capital:
Beginning of period		543,400		552,969
Common shares issued for delivery of share based awards		11,630		9,931
Common shares issued under employee stock purchase plan		797		824
Common shares repurchased		(28,441)		(1,948)
End of period		527,386		561,776
Additional paid-in capital:
Beginning of period		222,177		223,666
Share based compensation expense		4,719		4,418
Common shares issued for delivery of share based awards		(11,630)		(9,931)
Common shares withheld to cover income taxes payable due to delivery of share based awards		(2,963)		(3,281)
Common shares issued under employee stock purchase plan		(134)		(183)
Common shares repurchased		(17,710)		—
End of period		194,459		214,689
Retained (deficit) earnings:
Beginning of period		24,244		20,385
Net income attributable to Masonite		67,582		46,981
Common shares repurchased		(93,849)		(7,654)
End of period		(2,023)		59,712
Accumulated other comprehensive loss:
Beginning of period		(101,582)		(112,063)
Other comprehensive (loss) income attributable to Masonite, net of tax		(3,228)		2,337
End of period		(104,810)		(109,726)
Equity attributable to non-controlling interests:
Beginning of period		11,539		10,160
Net income attributable to non-controlling interests		1,139		1,167
Other comprehensive income attributable to non-controlling interests, net of tax		142		171
Dividends to non-controlling interests		(1,385)		(796)
End of period		11,435		10,702
Total equity, end of period		$	626,447	$	737,153

Common shares outstanding:
Beginning of period		23,623,887		24,422,934
Common shares issued for delivery of share based awards		169,370		154,458
Common shares issued under employee stock purchase plan		8,029		8,297
Common shares repurchased		(1,236,330)		(84,983)
End of period		22,564,956		24,500,706

See accompanying notes to the condensed consolidated financial statements.

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MASONITE INTERNATIONAL CORPORATION

Condensed Consolidated Statements of Cash Flows

(In thousands of U.S. dollars)

(Unaudited)

Three Months Ended
Cash flows from operating activities: April 4, 2021 March 29, 2020
Net income $ 48,148 $ 31,037
Adjustments to reconcile net income to net cash flow provided by operating activities:
Depreciation 18,279 16,018
Amortization 4,918 6,459
Share based compensation expense 4,418 3,470
Deferred income taxes 10,143 6,160
Unrealized foreign exchange (gain) loss (253) 94
Share of income from equity investees, net of tax (287) (911)
Pension and post-retirement funding, net of expense (1,631) (1,900)
Non-cash accruals and interest 421 427
(Gain) loss on sale of property, plant and equipment (597) 1,622
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (74,132) (37,990)
Inventories (5,681) (5,388)
Prepaid expenses and other assets 5,130 (491)
Accounts payable and accrued expenses (9,838) (15,163)
Other assets and liabilities (13,363) 2,602
Net cash flow (used in) provided by operating activities (14,325) 6,046
Cash flows from investing activities:
Additions to property, plant and equipment (13,930) (17,246)
Acquisition of businesses, net of cash acquired (160) 0
Proceeds from sale of property, plant and equipment 2,335 15
Other investing activities (559) (587)
Net cash flow used in investing activities (12,314) (17,818)
Cash flows from financing activities:
Repayments of long-term debt (945) (57)
Tax withholding on share based awards (3,281) (1,427)
Distributions to non-controlling interests (796) (710)
Repurchases of common shares (9,602) (34,770)
Net cash flow used in financing activities (14,624) (36,964)
Net foreign currency translation adjustment on cash (213) (3,853)
Decrease in cash, cash equivalents and restricted cash (41,476) (52,589)
Cash, cash equivalents and restricted cash, beginning of period 375,234 177,608
Cash, cash equivalents and restricted cash, at end of period $ 333,758 $ 125,019


	Three Months Ended
Cash flows from operating activities:	April 3, 2022		April 4, 2021
Net income	$	68,721	$	48,148
Adjustments to reconcile net income to net cash flow used in operating activities:


Depreciation	17,272		18,279
Amortization	4,612		4,918
Share based compensation expense	4,719		4,418
Deferred income taxes	7,027		10,143
Unrealized foreign exchange loss (gain)	594		(253)
Share of income from equity investees, net of tax	(1,687)		(287)

Pension and post-retirement funding, net of expense	(114)		(1,631)
Non-cash accruals and interest	(304)		421
Gain on sale of property, plant and equipment	(2,854)		(597)

Changes in assets and liabilities, net of acquisitions:
Accounts receivable	(64,948)		(74,132)
Inventories	(58,106)		(5,681)
Prepaid expenses and other assets	(387)		5,130
Accounts payable and accrued expenses	(11,294)		(9,838)
Other assets and liabilities	(1,100)		(13,363)
Net cash flow used in operating activities	(37,849)		(14,325)
Cash flows from investing activities:
Additions to property, plant and equipment	(19,095)		(13,930)
Acquisition of businesses, net of cash acquired	—		(160)

Proceeds from sale of property, plant and equipment	6,393		2,335
Other investing activities	(588)		(559)
Net cash flow used in investing activities	(13,290)		(12,314)
Cash flows from financing activities:

Repayments of long-term debt	—		(945)



Tax withholding on share based awards	(2,963)		(3,281)
Distributions to non-controlling interests	(1,385)		(796)
Repurchases of common shares	(140,000)		(9,602)
Net cash flow used in financing activities	(144,348)		(14,624)
Net foreign currency translation adjustment on cash	(1,394)		(213)
Decrease in cash, cash equivalents and restricted cash	(196,881)		(41,476)
Cash, cash equivalents and restricted cash, beginning of period	391,505		375,234
Cash, cash equivalents and restricted cash, at end of period	$	194,624	$	333,758

See accompanying notes to the condensed consolidated financial statements.

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MASONITE INTERNATIONAL CORPORATION

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Business Overview and Significant Accounting Policies

Unless we state otherwise or the context otherwise requires, references to "Masonite," "we," "our," "us" and the "Company" in these notes to the condensed consolidated financial statements refer to Masonite International Corporation and its subsidiaries.

Description of Business

Masonite International Corporation is one of the largest manufacturers of doors in the world, with significant market share in both interior and exterior door products. Masonite operates 6158 manufacturing and distribution facilities in 87 countries and sells doors to customers throughout the world with our largest markets being the United States, Canada and the United Kingdom.

Basis of Presentation

We prepare these unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States of America ("GAAP") and applicable rules and regulations of the U.S. Securities and Exchange Commission ("SEC") regarding interim financial reporting. Accordingly, they do not include all of the information and notes required by GAAP for annual financial statements. In the opinion of management, all adjustments consisting of normal and recurring entries considered necessary for a fair presentation of the results for the interim periods presented have been included. All significant intercompany balances and transactions have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts in the financial statements and accompanying notes. These estimates are based on information available as of the date of the unaudited condensed consolidated financial statements; therefore, actual results could differ from those estimates. Interim results are not necessarily indicative of the results for a full year.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended January ~~3, 2021,~~2, 2022, as filed with the ~~SEC.~~SEC (the "Annual Report"). Our fiscal year is the 52- or 53-week period ending on the Sunday closest to December 31. In a 52-week year, each fiscal quarter consists of 13 weeks. For ease of disclosure, the 13-week periods are referred to as three-month periods and the 52- or 53-week periods are referred to as year.

Changes in Accounting Standards and Policies

There have been no changes in the significant accounting policies from those that were disclosed in the fiscal year ~~2020~~2021 audited consolidated financial statements, other than as noted below.

Adoption of Recent Accounting Pronouncements

In December 2021, the Financial Accounting Standards Board ("FASB") issued ASU 2021-10, "Government Assistance," which requires annual disclosures that increase the transparency of transactions involving government grants, including (1) the types of transactions, (2) the accounting for those transactions and (3) the effect of those transactions on an entity's financial statements. The guidance is effective for annual periods beginning after December 15, 2021, with early adoption permitted. We have adopted the new guidance as of January 3, 2022, the beginning of fiscal year 2022, and the adoption did not have a material impact on our financial statements. We do not anticipate the adoption will have a material impact on our annual disclosures.

In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes," as part of its Simplification Initiative to reduce the cost and complexity in accounting for income taxes. This standard removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. It also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. We have adopted the new guidance prospectively as of January 4, 2021, the beginning of fiscal year 2021, and the adoption did not have a material impact on our financial statements.

In August 2018, the FASB issued ASU 2018-14, "Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans," which amended ASC 715, "Compensation—Retirement Benefits." This standard is applicable for employers that sponsor defined benefit pension or other postretirement plans, and eliminates disclosures no longer considered cost beneficial, clarifies specific disclosure requirements for entities that provide aggregate disclosures for two or more plans and adds requirements for explanations for significant gains and losses related to changes in benefit obligations. We adopted the new guidance using a retrospective approach as of January 3, 2021, the end of fiscal year 2020, and the adoption did not have a material impact on our financial statements or disclosures.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, “Financial Instruments—Credit Losses (Topic 326)”, which replaced the incurred loss methodology for recognizing credit losses with a current expected credit losses model. This standard applied to most financial assets, including trade receivables. Our prior accounts receivable policy is described in detail in our Annual Report on Form 10-K for the year ended January 3, 2021. We adopted the new guidance using a modified retrospective approach as of December 30, 2019, the beginning of fiscal year 2020, and the adoption did not have a material impact on our financial statements and no adjustment was necessary to retained earnings on December 30, 2019.

2. Acquisitions and Divestitures

~~Acquisitions~~

On ~~December 4, 2020,~~June 14, 2021, we completed the ~~acquisition~~sale of ~~a Lowe's Companies, Inc. door fabrication facility in~~all of the ~~United States~~capital stock of our Czech business ("Czech") for ~~cash~~ consideration of ~~$3.9 million. During the first quarter~~$7.0 million, net of ~~2021, as~~cash disposed. The divestiture of this business resulted in a ~~result~~loss on disposal of working capital adjustments we paid an additional $0.2 million. The purchase price allocation, net sales, net income (loss) attributable to Masonite and pro forma information for the acquisition are not presented as they were not material for any period presented.

~~On August 31, 2020, we acquired intellectual property and other assets related to an interior door technology for cash consideration~~subsidiaries of $1.9 million. The purchase price allocation, net sales, net income (loss) attributable to Masonite and pro forma information for the acquisition are not presented as they were not material for any period presented.

~~Divestitures~~

~~During~~$8.6 million, which was recognized in the second quarter of ~~2020, we completed~~2021 in the ~~liquidation of our legal entity in India. As a result, we recognized $2.1 million in loss on disposal of subsidiaries.~~Europe segment. The total charge consists of ~~$2.3~~$5.1 million relating to the write-off of the net assets sold and other professional fees and $3.5 million relating to the recognition of the cumulative translation adjustment out of accumulated other comprehensive ~~loss and $0.2 million relating to the write-off of net assets and other professional fees.~~loss.

/3. Accounts Receivable

Our customers consist mainly of retailers, distributors and contractors. Our 10 largest customers accounted for ~~61.3%~~60.4% and ~~53.1%~~56.7% of total accounts receivable as of April ~~4, 2021,~~3, 2022, and January ~~3, 2021,~~2, 2022, respectively. Our largest customer, The Home Depot, Inc., accounted for more than 10% of the consolidated gross accounts receivable balance as of April ~~4, 2021~~3, 2022, and January ~~3, 2021. In addition, we had one other retail customer that accounted for more than 10% of the consolidated gross accounts receivable balance as of April 4, 2021.~~2, 2022. The allowance for doubtful accounts balance was ~~$2.6~~$2.0 million and ~~$2.8~~$2.1 million as of April ~~4, 2021,~~3, 2022, and January ~~3, 2021,~~2, 2022, respectively.

We maintain an accounts receivable sales program with a third party (the "AR Sales Program"). Under the AR Sales Program, we can transfer ownership of eligible trade accounts receivable of certain customers. Receivables are sold outright to a third party who assumes the full risk of collection, without recourse to us in the event of a loss. Transfers of receivables under this program are accounted for as sales. Proceeds from the transfers reflect the face value of the accounts receivable less a discount. Receivables sold under the AR Sales Program are excluded from trade accounts receivable in the condensed consolidated balance sheets and are included in cash flows from operating activities in the condensed consolidated statements of cash flows. The discounts on the sales of trade accounts receivable sold, if any, under the AR Sales Program were not material for any of the periods presented and were recorded in selling, general and administration expenses within the condensed consolidated statements of income and comprehensive ~~income (loss).~~income.

In most countries we pay and collect value-added tax ("VAT") when procuring goods and services within the normal course of business. VAT receivables are established in jurisdictions where VAT paid exceeds VAT collected and are recoverable through the filing of refund claims.

4. Inventories

The amounts of inventory on hand were as follows as of the dates indicated:


(In thousands)	April 3, 2022		January 2, 2022
Raw materials	$	311,967	$	275,269
Finished goods	101,955		78,324
Provision for obsolete or aged inventory	(8,305)		(6,117)
Inventories, net	$	405,617	$	347,476

5. Accrued Expenses

The details of our accrued expenses were as follows as of the dates indicated:


(In thousands)	April 3, 2022		January 2, 2022
Accrued payroll	$	64,266	$	66,048
Accrued rebates	44,474		51,200
Current portion of operating lease liabilities	25,532		25,551
Accrued interest	6,441		17,125

Other accruals	85,380		77,376
Total accrued expenses	$	226,093	$	237,300

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(Unaudited)

~~4. Inventories~~

~~The amounts of inventory on hand were as follows as of the dates indicated:~~

(In thousands) April 4, 2021 January 3, 2021
Raw materials $ 195,119 $ 191,784
Finished goods 78,795 75,483
Provision for obsolete or aged inventory (6,684) (6,305)
Inventories, net $ 267,230 $ 260,962

~~5. Accrued Expenses~~

~~The details of our accrued expenses were as follows as of the dates indicated:~~

(In thousands) April 4, 2021 January 3, 2021
Accrued payroll $ 58,604 $ 86,517
Accrued rebates 54,384 49,531
Current portion of operating lease liabilities 24,876 22,667
Accrued interest 5,410 16,435
Accrued legal settlement 40,000 40,000
Other accruals 66,784 62,566
Total accrued expenses $ 250,058 $ 277,716

6. Long-Term Debt

(In thousands) April 4, 2021 January 3, 2021
5.375% senior unsecured notes due 2028 $ 500,000 $ 500,000
5.750% senior unsecured notes due 2026 300,000 300,000
Debt issuance costs (8,372) (8,694)
Other long-term debt 0 936
Total long-term debt $ 791,628 $ 792,242


(In thousands)	April 3, 2022		January 2, 2022
3.50% senior unsecured notes due 2030	$	375,000	$	375,000
5.375% senior unsecured notes due 2028	500,000		500,000

Debt issuance costs	(8,959)		(9,279)


Total long-term debt	$	866,041	$	865,721

Interest expense related to our consolidated indebtedness under our senior unsecured notes was ~~$11.4~~$10.3 million and ~~$11.3~~$11.4 million for the three months ended April 3, 2022 and April 4, 2021, respectively.

3.50% Senior Notes due 2030

On July 26, 2021, we issued $375.0 million aggregate principal senior unsecured notes (the "2030 Notes"). The 2030 Notes bear interest at 3.50% per annum, payable in cash semiannually in arrears on February 15 and ~~March 29, 2020, respectively.~~August 15 of each year and are due February 15, 2030. The 2030 Notes were issued at par.

Information concerning obligations under the 2030 Notes and the indenture governing them are described in detail in our Annual Report. As of April 3, 2022, we were in compliance with all covenants under the indenture governing the 2030 Notes.

5.375% Senior Notes due 2028

On July 25, 2019, we issued $500.0 million aggregate principal senior unsecured notes (the "2028 Notes"). The 2028 Notes bear interest at 5.375%, payable in cash semiannually in arrears on February 1 and August 1 of each year and are due February 1, 2028. The 2028 Notes were issued at par.

Information concerning obligations under the 2028 Notes and the indenture governing them are described in detail in our Annual ~~Report on Form 10-K for the year ended January 3, 2021.~~Report. As of April ~~4, 2021,~~3, 2022, we were in compliance with all covenants under the indenture governing the 2028 ~~Notes.~~

~~5.750% Senior Notes due 2026~~

On August 27, 2018, we issued $300.0 million aggregate principal senior unsecured notes (the "2026 Notes"). The 2026 Notes bear interest at 5.750% per annum, payable in cash semiannually in arrears on March 15 and September 15 of each year and are due September 15, 2026. The 2026 Notes were issued at par.

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~~(Unaudited)~~

Information concerning obligations under the 2026 Notes and the indenture governing them are described in detail in our Annual Report on Form 10-K for the year ended January 3, 2021. As of April 4, 2021, we were in compliance with all covenants under the indenture governing the 2026 Notes.

ABL Facility

On January 31, 2019, we and certain of our subsidiaries entered into a $250.0 million asset-based revolving credit facility (the "ABL Facility") maturing on January 31, 2024, which replaced the previous facility. Borrowings under the ABL Facility bear interest at a rate equal to, at our option, (i) the United States, Canadian or United Kingdom Base Rate (each as defined in the credit agreement relating to the ABL Facility, the "Amended and Restated Credit Agreement") plus a margin ranging from 0.25% to 0.50% per annum, or (ii) the Adjusted LIBO Rate or BA Rate (each as defined in the Amended and Restated Credit Agreement), plus a margin ranging from 1.25% to 1.50% per annum. In addition to paying interest on any outstanding principal under the ABL Facility, a commitment fee is payable on the undrawn portion of the ABL Facility in an amount equal to 0.25% per annum of the average daily balance of unused commitments during each calendar quarter.

The ABL Facility contains various customary representations, warranties by us and covenants that are described in detail in our Annual ~~Report on Form 10-K for the year ended January 3, 2021.~~Report. As of April ~~4, 2021,~~3, 2022, we were in compliance with all covenants under the credit agreement governing the ABL Facility. We had availability of ~~$220.5~~$257.7 million under our ABL Facility and there were 0no amounts outstanding as of April ~~4, 2021.~~3, 2022.

7. Commitments and Contingencies

The following discussion describes material developments in previously disclosed legal proceedings that occurred since January ~~3, 2021.~~2, 2022. Refer to Note 10. Commitments and Contingencies in the consolidated financial statements in our Annual Report ~~on Form 10-K for the year ended January 3, 2021,~~ for a full description of the previously disclosed legal proceedings.

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(Unaudited)

Indemnifications

We have provided customary indemnifications to our landlords under certain property lease agreements for claims by third parties in connection with their use of the premises. We also have provided routine indemnifications against adverse effects related to changes in tax laws and patent infringements by third parties. The maximum amount of these indemnifications cannot be reasonably estimated due to their nature. In some cases, we have recourse against other parties to mitigate the risk of loss from these indemnifications. Historically, we have not made any significant payments relating to such indemnifications.

Antitrust ~~Class Action Proceedings- United States~~

With respect to the putative class action antitrust cases pending in the Eastern District of Virginia, the final Court approval hearing date for the direct purchaser settlement has been set for June 1, 2021, and the final approval hearing date for the indirect purchaser settlement has been set for July 13, 2021.

Class Action Proceedings - Canada

~~With respect to the putative~~On May 19, 2020, an intended class ~~action antitrust case pending in Quebec, Canada, all parties~~proceeding was commenced in the ~~Quebec~~Province of Québec, Canada naming as defendants Masonite Corporation, Masonite International Corporation, JELD-WEN, Inc., JELD-WEN Holding, Inc. and JELD-WEN of Canada, Ltd. The plaintiff alleges that the Masonite and JELD-WEN defendants engaged in anticompetitive conduct, including price-fixing involving interior molded doors. The intended class proceeding seeks damages, punitive damages and other relief. On December 22, 2020, the parties filed a motion with the ~~Quebec~~ court seeking to stay the proceeding.

Also, on October 2, 2020, an intended class proceeding ~~on December 22, 2020. The Quebec Court has not yet released its decision regarding this motion.~~

~~With respect to the putative class action antitrust case pending~~was commenced in the Federal Court of Canada naming as defendants Masonite International Corporation, Masonite Corporation, JELD-WEN, Inc., JELD-WEN Holding, Inc. and JELD-WEN of Canada, Ltd. The plaintiff alleges that the Masonite and JELD-WEN defendants engaged in anticompetitive conduct, including price-fixing involving interior molded doors. The intended class proceeding seeks damages, punitive damages and other relief. This proceeding is at an early stage. The plaintiff served its certification record on March 31, 2021. The parties ~~will confer~~are conferring regarding narrowing the issues and with respect to ~~prepare~~ a mutually agreeable timeline ~~for the~~of steps leading up to the plaintiff's certification motion. The parties have written to the Federal Court advising that the parties do not yet propose to set a timetable of steps leading to the certification motion and ~~will~~requesting that the parties be permitted to provide a further update to the Federal Court by ~~way of a case conference on or before~~ May ~~31, 2021.~~30, 2022. We have not recognized an expense related to damages in connection with this matter because,

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~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~

although an adverse outcome is reasonably possible, the amount or range of any potential loss cannot be reasonably estimated.

While we intend to defend against these claims vigorously, there can be no assurance that the ultimate resolution of this litigation will not have a material, adverse effect on our consolidated financial condition or results of operations.

General

In addition to the above, from time to time, we are involved in various claims and legal actions, including but not limited to wage and hour and labor lawsuits. In the opinion of management, the ultimate disposition of these matters, individually and in the aggregate, will not have a material adverse effect on our financial condition, results of operations or cash flows.

8. Share Based Compensation Plans

Share based compensation expense was ~~$4.4~~$4.7 million and ~~$3.5~~$4.4 million for the three months ended April 3, 2022 and April 4, 2021, ~~and March 29, 2020,~~ respectively. As of April ~~4, 2021,~~3, 2022, the total remaining unrecognized compensation expense related to share based compensation amounted to ~~$29.6~~$31.7 million, which will be amortized over the weighted average remaining requisite service period of ~~1.9~~2.1 years.

Equity Incentive Plans

Our equity incentive plans under the ~~2009~~2021 Equity Plan and ~~the~~ 2012 Plan are described in detail and defined in our Annual Report on Form 10-K for the year ended January 3, 2021. The aggregate number of common shares that can be issued with respect to equity awards under the 2012 Plan cannot exceed 2,000,000 shares plus the number of shares subject to existing grants under the 2009 Plan that may expire or be forfeited or canceled. As of April 4, 2021, there were 614,231 shares of common stock available for future issuance under the 2012 Plan.

On March 10, 2021, the Board of Directors adopted the Masonite International Corporation 2021 Omnibus Incentive Equity Plan (the "2021 Plan"), subject to approval by our shareholders at the Annual General Meeting of Shareholders on May 13, 2021. The 2021 Plan is effective for ten years from the date of adoption.Report. The aggregate number of common shares that can be issued with respect to equity awards under the 2021 Equity Plan cannot exceed 880,000 ~~shares~~shares; plus the number of shares reserved for the 2012 Plan that is in excess of the number of shares related to outstanding grants; plus the number of shares subject to existing grants under the 2012 Plan that may expire or be forfeited or cancelled. As of April 3, 2022, there were 1,237,928 shares of common stock available for future issuance under the 2021 Equity Plan.

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(Unaudited)

Deferred Compensation Plan

We offer to certain of our employees and directors a Deferred Compensation Plan, which is further described in our Annual ~~Report on Form 10-K for the year ended January 3, 2021.~~Report. As of April ~~4, 2021,~~3, 2022, the liability and asset relating to deferred compensation had a fair value of ~~$8.0~~$7.9 million and ~~$8.3~~$8.7 million, respectively. As of April ~~4, 2021,~~3, 2022, participation in the deferred compensation plan is limited and no restricted stock awards have been deferred into the deferred compensation plan. All plan investments are categorized as having Level 1 valuation inputs as established by the FASB’s Fair Value Framework.

Stock Appreciation Rights

We have granted Stock Appreciation Rights ("SARs") to certain employees under both the ~~2009~~2021 Equity Plan and the 2012 Plan, which entitle the recipient to the appreciation in value of a number of common shares over the exercise price over a period of time, each as specified in the applicable award agreement. The exercise price of any SAR granted may not be less than the fair market value of our common shares on the date of grant. The compensation expense for the SARs is measured based on the fair value of the SARs at the date of grant and is recognized over the requisite service period. The SARs vest over a maximum of three years, have a life of ten years and settle in common shares. It is assumed that all time-based SARs will vest. We recognize forfeitures of SARs in the period in which they occur.

The total fair value of SARs vested was ~~$0.7~~$0.6 million during the three months ended April ~~4, 2021.~~

3, 2022.


Three Months Ended April 3, 2022	Stock Appreciation Rights	Aggregate Intrinsic Value (in thousands)		Weighted Average Exercise Price		Average Remaining Contractual Life (Years)
Outstanding, beginning of period	158,725	$	7,324	$	71.81	7.5
Granted	32,228			88.61
Exercised	(3,780)	122		61.55
Forfeited	—			—
Outstanding, end of period	187,173	$	2,685	$	74.91	7.7

Exercisable, end of period	108,311	$	2,101	$	67.98	7.0

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~~(Unaudited)~~

Three Months Ended April 4, 2021 Stock Appreciation Rights Aggregate Intrinsic Value (in thousands) Weighted Average Exercise Price Average Remaining Contractual Life (Years)
Outstanding, beginning of period 207,094 $ 7,409 $ 62.56 7.5
Granted 28,707 107.68
Exercised (11,240) 664 52.32
Outstanding, end of period 224,561 $ 11,469 $ 68.84 7.7
Exercisable, end of period 120,764 $ 6,978 $ 62.14 6.7

The value of SARs granted is determined using the Black-Scholes-Merton valuation model, and the corresponding expense is expected to be recognized over the average requisite service period of 2.0 years. Expected volatility is based upon the historical volatility of our common shares amongst other considerations. The expected term is calculated ~~using~~based upon historical employee exercise behavior and the ~~simplified method, due to insufficient exercise activity during recent years as a basis from which to estimate future exercise patterns.~~contractual term of the options amongst other considerations. The weighted average grant date assumptions used for the SARs granted were as follows for the periods indicated:

2021 Grants
SAR value (model conclusion) $ 28.08
Risk-free rate 0.8 %
Expected dividend yield 0.0 %
Expected volatility 25.2 %
Expected term (years) 6.0


	2022 Grants
SAR value (model conclusion)	$	26.52
Risk-free rate	1.9		%
Expected dividend yield	0.0		%
Expected volatility	26.5		%
Expected term (years)	6.0

Restricted Stock Units

We have granted Restricted Stock Units ("RSUs") to directors and certain employees under the 2012 ~~Plan.~~and 2021 Plans. The RSUs confer the right to receive shares of our common stock at a specified future date or when certain conditions are met. The compensation expense for the RSUs awarded is based on the fair value of the RSUs at the date of grant, which is equal to the stock price on the date of grant, and is recognized over the requisite service period. The RSUs vest over a maximum of three years and call for the underlying shares to be delivered no later than 30 days following the vesting date unless the participant is subject to a blackout period. In such case, the shares are to be

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

delivered once the blackout restriction has been lifted. It is assumed that all time-based RSUs will vest. We recognize forfeitures of RSUs in the period in which they occur.


Three Months Ended April 3, 2022	Total Restricted Stock Units Outstanding	Weighted Average Grant Date Fair Value
Outstanding, beginning of period	442,106	$	87.24
Granted	217,967	88.88
Performance adjustment (1)	25,234	57.19
Delivered	(167,632)	75.80
Withheld to cover (2)	(30,537)
Forfeited	(5,929)	96.53
Outstanding, end of period	481,209	$	93.48

___________

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~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~

Three Months Ended April 4, 2021 Total Restricted Stock Units Outstanding Weighted Average Grant Date Fair Value
Outstanding, beginning of period 488,057 $ 68.15
Granted 169,790 108.99
Performance adjustment (1)
14,474 63.05
Delivered (149,818) 67.62
Withheld to cover (2)
(30,177)
Forfeited (2,932) 70.47
Outstanding, end of period 489,394 $ 83.00

~~____________~~

(1) Performance-based RSUs are presented as outstanding, granted and forfeited in the table above assuming targets are met and the awards pay out at 100%. These awards are settled with payouts ranging from zero to 200% of the target award value depending on achievement. The performance adjustment represents the difference in shares ultimately awarded due to performance attainment above or below target.

(2) A portion of the vested RSUs delivered were net share settled to cover statutory requirements for income and other employment taxes. We remit the equivalent cash to the appropriate taxing authorities. These net share settlements had the effect of share repurchases by us as we reduced and retired the number of shares that would have otherwise been issued as a result of the vesting.

Approximately two-thirds of the RSUs granted during the three months ended April ~~4, 2021,~~3, 2022, vest at specified future dates with only service requirements, while the remaining portion of the RSUs vest based on both performance and service requirements. The value of RSUs granted in the three months ended April ~~4, 2021,~~3, 2022, is being recognized over the weighted average requisite service period of 2.4 years. During the three months ended April ~~4, 2021, there were 179,995~~3, 2022, 198,169 RSUs vested at a fair value of ~~$11.9~~$13.8 million.

9. Restructuring Costs

In May 2021, we initiated further actions to improve overall business performance that includes the reorganization of our specialty door manufacturing capacity in our Architectural reportable segment. The reorganization of our manufacturing capacity resulted in the closure of one existing stile and rail facility and related headcount reductions beginning in the second quarter of 2021 (collectively, the "2021 Plan"). Costs associated with the 2021 Plan include severance and closure charges. As of April 3, 2022, we do not expect to incur any material future charges related to the 2021 Plan.

In November 2020, we began implementing a plan to improve overall business performance that includes the reorganization of our manufacturing capacity and a reduction of our overhead and selling, general and administration workforce primarily in our Architectural reportable segment as well as limited actions in the North American Residential reportable segment. The reorganization of our manufacturing capacity involves specific facilities in the Architectural segment and costs associated with the closure of these facilities and related headcount reductions began taking place in the fourth quarter of 2020 (collectively, the "2020 Plan"). Costs associated with the 2020 Plan include severance and closure ~~charges and will continue through 2021.~~charges. As of April ~~4, 2021,~~3, 2022, we do not expect to incur ~~approximately $3 million to $4 million of additional~~any material future charges related to the 2020 Plan.

In February 2019, we began implementing a plan to improve overall business performance that includes the reorganization of our manufacturing capacity and a reduction of our overhead and selling, general and administration workforce across all of our reportable segments and in our head offices. The reorganization of our manufacturing capacity involves specific plants in the North American Residential and Architectural segments and costs associated with the closure of these plants and related headcount reductions began taking place in the first quarter of 2019 (collectively, the "2019 Plan"). Costs associated with the 2019 Plan include severance, retention and closure ~~charges and will continue through 2021.~~charges. As of April ~~4, 2021,~~3, 2022, we do not expect to incur ~~approximately $1 million to $2 million of additional~~any material future charges related to the 2019 Plan.

During the fourth quarter of 2018, we began implementing a plan to reorganize and consolidate certain aspects of our United Kingdom head office function and optimize our portfolio by divesting non-core assets to enable more effective and consistent business processes in the Europe segment. In addition, in the North American Residential segment we announced a new facility that will optimize and expand capacity through increased automation, which resulted in the closure of one existing facility and related headcount reductions beginning in the second quarter of 2019 (collectively, the “2018 Plan”). Costs associated with the 2018 Plan included severance, retention and closure charges

1110

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(Unaudited)

~~and continued throughout 2019. As of April 4, 2021, we do not expect to incur any material future charges related to the 2018 Plan.~~

The following tables summarize the restructuring ~~charges~~(benefit) costs recorded for the periods indicated:


	Three Months Ended April 3, 2022
(In thousands)	North American Residential		Architectural		Corporate & Other		Total
2021 Plan	$	—	$	14	$	—	$	14
2020 Plan	—		33		—		33
2019 Plan	(91)		—		25		(66)

Total Restructuring (Benefit) Costs	$	(91)	$	47	$	25	$	(19)


		Three Months Ended April 4, 2021						Three Months Ended April 4, 2021
(In thousands)	(In thousands)	North American Residential		Architectural		Corporate & Other			Total		(In thousands)	North American Residential		Architectural		Corporate & Other		Total
2020 Plan	2020 Plan	$	0	$	1,514	$	0		$	1,514	2020 Plan	$	—	$	1,514	$	—	$	1,514
2019 Plan	2019 Plan	(361)		339		151			129		2019 Plan	(361)		339		151		129

Total Restructuring Costs	Total Restructuring Costs	$	(361)	$	1,853	$	151		$	1,643	Total Restructuring Costs	$	(361)	$	1,853	$	151	$	1,643


	Cumulative Amount Incurred Through April 3, 2022
(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total
2021 Plan	$	—	$	—	$	1,680	$	—	$	1,680
2020 Plan	52		—		5,265		23		5,340
2019 Plan	9,059		365		1,671		2,614		13,709
Total Restructuring Costs	$	9,111	$	365	$	8,616	$	2,637	$	20,729

Three Months Ended March 29, 2020
(In thousands) North American Residential Europe Architectural Corporate & Other Total
2019 Plan $ 728 $ (37) $ 862 $ 267 $ 1,820
2018 Plan 121 0 0 0 121
Total Restructuring Costs $ 849 $ (37) $ 862 $ 267 $ 1,941

Cumulative Amount Incurred Through April 4, 2021
(In thousands) North American Residential Europe Architectural Corporate & Other Total
2020 Plan $ 29 $ 0 $ 3,247 $ 0 $ 3,276
2019 Plan 8,961 359 2,010 2,218 13,548
2018 Plan 2,180 2,275 0 0 4,455
Total Restructuring Costs $ 11,170 $ 2,634 $ 5,257 $ 2,218 $ 21,279

The changes in the accrual for restructuring by activity were as follows for the periods indicated:


(In thousands)	January 2, 2022		Severance		Closure Costs		Cash Payments		April 3, 2022
2021 Plan	$	25	$	(25)	$	39	$	(39)	$	—
2020 Plan	22		—		33		(33)		22
2019 Plan	2		6		(72)		64		—
Total	$	49	$	(19)	$	—	$	(8)	$	22


(In thousands)	January 3, 2021		Severance		Closure Costs		Cash Payments		April 4, 2021
2020 Plan	$	1,492	$	149	$	1,365	$	(2,296)	$	710
2019 Plan	291		85		44		(294)		126
Total	$	1,783	$	234	$	1,409	$	(2,590)	$	836

(In thousands) December 29,
2019 Severance Closure Costs Cash Payments March 29,
2020
2019 Plan $ 1,535 $ 187 $ 1,633 $ (2,769) $ 586
2018 Plan 0 103 18 (121) 0
Total $ 1,535 $ 290 $ 1,651 $ (2,890) $ 586

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~~(Unaudited)~~

10. Income Taxes

The effective tax rate differs from the Canadian statutory rate of 26.5% primarily due to mix of earnings in foreign jurisdictions that are subject to tax rates which differ from the Canadian statutory rate. In addition, we recognized ~~$2.0~~$1.1 million of income tax benefit due to the exercise and delivery of ~~share-based~~share based awards during the three months ended April ~~4, 2021,~~3, 2022, compared to ~~$0.7~~$2.0 million of income tax benefit during the three months ended ~~March 29, 2020.~~April 4, 2021.

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11. Earnings Per Share

Basic earnings per share ("EPS") is calculated by dividing earnings attributable to Masonite by the weighted average number of our common shares outstanding during the period. Diluted EPS is calculated by dividing earnings attributable to Masonite by the weighted average number of common shares plus the incremental number of shares issuable from non-vested and vested RSUs and SARs outstanding during the period.

(In thousands, except share and per share information) Three Months Ended
April 4, 2021 March 29, 2020
Net income attributable to Masonite $ 46,981 $ 29,885
Shares used in computing basic earnings per share 24,469,653 24,861,442
Effect of dilutive securities:
Incremental shares issuable under share compensation plans 448,856 353,322
Shares used in computing diluted earnings per share 24,918,509 25,214,764
Basic earnings per common share attributable to Masonite $ 1.92 $ 1.20
Diluted earnings per common share attributable to Masonite $ 1.89 $ 1.19
Anti-dilutive instruments excluded from diluted earnings per common share 28,707 258,773

The weighted average number of shares outstanding utilized for the diluted EPS calculation contemplates the exercise of all currently outstanding SARs and the conversion of all RSUs. The dilutive effect of such equity awards is calculated based on the weighted average share price for each fiscal period using the treasury stock method.


(In thousands, except share and per share information)	Three Months Ended
		April 3, 2022		April 4, 2021
Net income attributable to Masonite		$	67,582	$	46,981

Shares used in computing basic earnings per share		23,081,474		24,469,653
Effect of dilutive securities:
Incremental shares issuable under share compensation plans		296,880		448,856
Shares used in computing diluted earnings per share		23,378,354		24,918,509

Basic earnings per common share attributable to Masonite		$	2.93	$	1.92
Diluted earnings per common share attributable to Masonite		$	2.89	$	1.89

Anti-dilutive instruments excluded from diluted earnings per common share		72,954		28,707

The Company's Board of Directors has approved 5 share repurchase authorizations, the most recent being an incremental $200.0 million share repurchase program approved on February 21, 2022. In addition, the Company announced that its Board of Directors authorized it to enter into an accelerated share repurchase ("ASR") transaction as part of the new share repurchase program. The Company entered into an ASR transaction during the first quarter of 2022 with a third-party financial institution for the repurchase of $100.0 million of its outstanding common shares. At inception, pursuant to the agreement, the Company paid $100.0 million to the financial institution using cash on hand and received an initial delivery of 848,087 common shares on the same day. The amount paid for the repurchase of Masonite’s outstanding common shares is reflected as a reduction of share capital, additional paid-in capital and retained earnings. Repurchased common shares is reflected as a reduction of equity. However, under the terms of the ASR, the total number of shares delivered and average purchase price paid per share will be determined upon settlement based on the volume-weighted average price ("VWAP") over the term of the ASR, less an agreed upon discount. The final settlement of the transactions under the ASR is expected to occur during or prior to the third quarter of 2022.

12. 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

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

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;

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~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~

• registration and listing fees;

• restructuring ~~costs;~~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 was updated in the third quarter of 2020 to exclude other items as these charges are not part of our underlying business performance. This change had no impact to Adjusted EBITDA for the three months ended March 29, 2020. This definition of Adjusted EBITDA differs from the definitions of EBITDA contained in the indentures governing the ~~2028~~2030 Notes and ~~2026~~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 April 3, 2022
(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total
Net sales	$	569,429	$	81,839	$	74,659	$	6,196	$	732,123
Intersegment sales	(865)		(1,371)		(3,670)		—		(5,906)
Net sales to external customers	$	568,564	$	80,468	$	70,989	$	6,196	$	726,217

Adjusted EBITDA	$	127,667	$	11,843	$	(2,898)	$	(11,860)	$	124,752


		Three Months Ended April 4, 2021											Three Months Ended April 4, 2021
(In thousands)	(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total		(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total
Net sales	Net sales	$	477,229	$	90,206	$	78,074	$	6,343	$	651,852	Net sales	$	477,229	$	90,206	$	78,074	$	6,343	$	651,852
Intersegment sales	Intersegment sales	(765)		(1,667)		(3,083)		0		(5,515)		Intersegment sales	(765)		(1,667)		(3,083)		—		(5,515)
Net sales to external customers	Net sales to external customers	$	476,464	$	88,539	$	74,991	$	6,343	$	646,337	Net sales to external customers	$	476,464	$	88,539	$	74,991	$	6,343	$	646,337

Adjusted EBITDA	Adjusted EBITDA	$	94,482	$	16,755	$	1,994	$	(11,206)	$	102,025	Adjusted EBITDA	$	94,482	$	16,755	$	1,994	$	(11,206)	$	102,025

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Three Months Ended March 29, 2020
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Net sales $ 384,445 $ 71,156 $ 94,555 $ 5,427 $ 555,583
Intersegment sales (588) (430) (3,337) 0 (4,355)
Net sales to external customers $ 383,857 $ 70,726 $ 91,218 $ 5,427 $ 551,228
Adjusted EBITDA $ 71,696 $ 9,679 $ 10,582 $ (10,440) $ 81,517
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

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
(In thousands)		April 3, 2022		April 4, 2021
Net income attributable to Masonite		$	67,582	$	46,981
Plus:
Depreciation		17,272		18,279
Amortization		4,612		4,918
Share based compensation expense		4,719		4,418
Gain on disposal of property, plant and equipment		(2,854)		(597)
Restructuring (benefit) costs		(19)		1,643


Interest expense, net		10,239		11,946

Other (income) expense, net		(1,415)		(1,343)
Income tax expense		23,477		14,613

Net income attributable to non-controlling interest		1,139		1,167
Adjusted EBITDA		$	124,752	$	102,025

13. Accumulated Other Comprehensive Loss and Other Comprehensive (Loss) Income

A rollforward of the components of accumulated other comprehensive loss is as follows for the periods indicated:


	Three Months Ended
(In thousands)		April 3, 2022		April 4, 2021
Accumulated foreign currency translation losses, beginning of period		$	(96,919)	$	(93,684)
Foreign currency translation (loss) gain		(2,105)		2,228
Income tax benefit on foreign currency translation (loss) gain		11		14

Less: foreign currency translation gain attributable to non-controlling interest		1,139		171
Accumulated foreign currency translation losses, end of period		(100,152)		(91,613)

Accumulated pension and other post-retirement adjustments, beginning of period		(4,663)		(18,379)


Amortization of actuarial net losses		6		334
Income tax expense on amortization of actuarial net losses		(1)		(68)


Accumulated pension and other post-retirement adjustments		(4,658)		(18,113)

Accumulated other comprehensive loss		$	(104,810)	$	(109,726)

Other comprehensive (loss) income, net of tax		$	(2,089)	$	2,508
Less: other comprehensive income attributable to non-controlling interest		1,139		171
Other comprehensive (loss) income attributable to Masonite		$	(3,228)	$	2,337

Cumulative translation adjustments are reclassified out of accumulated other comprehensive loss into loss on disposal of subsidiaries in the condensed consolidated statements of income and comprehensive income. Actuarial net losses are reclassified out of accumulated other comprehensive loss into cost of goods sold in the condensed consolidated statements of income and comprehensive income.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

(Unaudited)

~~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
(In thousands) April 4, 2021 March 29, 2020
Net income attributable to Masonite $ 46,981 $ 29,885
Plus:
Depreciation 18,279 16,018
Amortization 4,918 6,459
Share based compensation expense 4,418 3,470
(Gain) loss on disposal of property, plant and equipment (597) 1,622
Restructuring costs 1,643 1,941
Interest expense, net 11,946 11,282
Other (income) expense, net (1,343) 49
Income tax expense 14,613 9,639
Net income attributable to non-controlling interest 1,167 1,152
Adjusted EBITDA $ 102,025 $ 81,517

~~13. Accumulated Other Comprehensive Loss and Other Comprehensive Income (Loss)~~

~~A rollforward of the components of accumulated other comprehensive loss is as follows for the periods indicated:~~

Three Months Ended
(In thousands) April 4, 2021 March 29, 2020
Accumulated foreign currency translation losses, beginning of period $ (93,684) $ (113,336)
Foreign currency translation gain (loss) 2,228 (38,687)
Income tax benefit (expense) on foreign currency translation gain (loss) 14 (44)
Less: foreign currency translation gain (loss) attributable to non-controlling interest 171 (579)
Accumulated foreign currency translation losses, end of period (91,613) (151,488)
Accumulated pension and other post-retirement adjustments, beginning of period (18,379) (16,833)
Amortization of actuarial net losses 334 173
Income tax expense on amortization of actuarial net losses (68) (45)
Accumulated pension and other post-retirement adjustments (18,113) (16,705)
Accumulated other comprehensive loss $ (109,726) $ (168,193)
Other comprehensive income (loss), net of tax $ 2,508 $ (38,603)
Less: other comprehensive income (loss) attributable to non-controlling interest 171 (579)
Other comprehensive income (loss) attributable to Masonite $ 2,337 $ (38,024)

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~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(Unaudited)~~

~~are reclassified out of accumulated other comprehensive loss into cost of goods sold in the condensed consolidated statements of comprehensive income (loss).~~

Foreign currency translation ~~gains~~losses as a result of translating our foreign assets and liabilities into U.S. dollars during the three months ended April ~~4, 2021,~~3, 2022, were ~~$2.2~~$2.1 million, primarily driven by ~~strengthening~~weakening of the Pound Sterling and the ~~Canadian Dollar,~~Euro, partially offset by ~~weakening~~strengthening of the ~~Euro~~Canadian Dollar in comparison to the U.S. Dollar during the period.

14. Supplemental Cash Flow Information

Certain cash and non-cash transactions were as follows for the periods indicated:


	Three Months Ended
(In thousands)	April 3, 2022		April 4, 2021
Transactions involving cash:
Interest paid	$	20,341	$	22,247
Interest received	166		25
Income taxes paid	16,735		16,076
Income tax refunds	8		438
Cash paid for operating lease liabilities	8,372		7,345
Cash paid for finance lease liabilities	366		327
Non-cash transactions from operating activities:
Right-of-use assets acquired under operating leases	1,434		4,662

Three Months Ended
(In thousands) April 4, 2021 March 29, 2020
Transactions involving cash:
Interest paid $ 22,247 $ 22,662
Interest received 25 641
Income taxes paid 16,076 3,030
Income tax refunds 438 392
Cash paid for operating lease liabilities 7,345 6,835
Cash paid for finance lease liabilities 327 317
Non-cash transactions from operating activities:
Right-of-use assets acquired under operating leases 4,662 3,863

The following reconciles total cash, cash equivalents and restricted cash as of the dates indicated:

April 4, 2021 January 3, 2021
Cash and cash equivalents $ 323,198 $ 364,674
Restricted cash 10,560 10,560
Total cash, cash equivalents and restricted cash $ 333,758 $ 375,234


	April 3, 2022		January 2, 2022
Cash and cash equivalents	$	183,526	$	381,395
Restricted cash	11,098		10,110
Total cash, cash equivalents and restricted cash	$	194,624	$	391,505

Property, plant and equipment additions in accounts payable were ~~$2.7~~$7.2 million and ~~$5.6~~$10.7 million as of April ~~4, 2021,~~3, 2022, and January ~~3, 2021,~~2, 2022, respectively.

15. Fair Value of Financial Instruments

The carrying amounts of our cash and cash equivalents, restricted cash, accounts receivable, income taxes receivable, accounts payable, accrued expenses and income taxes payable approximate fair value because of the short-term maturity of those instruments. The estimated fair values and carrying values of our long-term debt instruments were as follows for the periods indicated:

April 4, 2021 January 3, 2021
(In thousands) Fair Value Carrying Value Fair Value Carrying Value
5.375% senior unsecured notes due 2028 $ 530,575 $ 494,579 $ 535,580 $ 494,393
5.750% senior unsecured notes due 2026 $ 313,098 $ 297,049 $ 315,972 $ 296,913


	April 3, 2022				January 2, 2022
(In thousands)	Fair Value		Carrying Value		Fair Value		Carrying Value
3.50% senior unsecured notes due 2030	$	337,841	$	370,728	$	373,238	$	370,593
5.375% senior unsecured notes due 2028	$	502,080	$	495,313	$	526,730	$	495,128

These estimates are based on market quotes and calculations based on current market rates available to us and are categorized as having Level 2 valuation inputs as established by the FASB's Fair Value Framework. Market quotes used in these calculations are based on bid prices for our debt instruments and are obtained from and corroborated with multiple independent sources. The market quotes obtained from independent sources are within the range of management's expectations.

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~~(Unaudited)~~

~~16. Subsequent Event~~

In May 2021, we initiated further actions to improve overall business performance that includes the reorganization of our manufacturing capacity in our Architectural reportable segment. The reorganization of our manufacturing capacity involves specific facilities in the Architectural segment and costs associated with the reorganization of these facilities and related headcount reductions began taking place in the second quarter of 2021 (collectively, the "2021 Plan").

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is based upon accounting principles generally accepted in the United States of America and discusses the financial condition and results of operations for Masonite International Corporation for the three months ended April 3, 2022, and April 4, ~~2021, and March 29, 2020.~~2021. In this MD&A, "Masonite," "we," "us," "our" and the "Company" refer to Masonite International Corporation and its subsidiaries.

This discussion should be read in conjunction with (i) the unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and (ii) the annual audited consolidated financial statements, including the accompanying notes and MD&A, which are included in our Annual Report on Form 10-K for the year ended January ~~3, 2021.~~2, 2022 (the "Annual Report"). The following discussion should also be read in conjunction with the disclosure under "Special Note Regarding Forward Looking Statements" elsewhere in this Quarterly Report on Form 10-Q. Our actual results could differ materially from the forward-looking statements as a result of these risks and uncertainties.

Overview

We are a leading global designer, manufacturer, marketer and distributor of interior and exterior doors for the new construction and repair, renovation and remodeling sectors of the residential and the non-residential building construction markets. Since 1925, we have provided our customers with innovative products and superior service at compelling values. ~~In order to~~Through innovative door solutions, a better ~~serve~~door buying experience for our customers and ~~create sustainable competitive advantages, we focus on developing innovative products,~~partners

and advanced manufacturing ~~capabilities and technology-driven sales~~ and service ~~solutions.~~delivery, we deliver a commitment of Doors That Do MoreTM.

We market and sell our products to remodeling contractors, builders, homeowners, retailers, dealers, lumberyards, commercial and general contractors and architects through well-established wholesale, retail and direct distribution channels as part of our cross-merchandising strategy. Customers are provided a broad product offering of interior and exterior doors and entry systems at various price points. We manufacture a broad line of interior doors, including residential molded, flush, stile and rail, louver and specially-ordered commercial and architectural doors; door components for internal use and sale to other door manufacturers; and exterior residential steel, fiberglass and wood doors and entry systems.

We operate 6158 manufacturing and distribution facilities in ~~eight~~seven countries in North America, South America, Europe and Asia, which are strategically located to serve our customers through multiple distribution channels. These distribution channels include: (i) direct distribution to retail home center customers; (ii) one-step distribution that sells directly to homebuilders and contractors; and (iii) two-step distribution through wholesale distributors. For retail home center customers, numerous door fabrication facilities provide value-added fabrication and logistical services, including pre-finishing and store delivery of pre-hung interior and exterior doors. We believe our ability to provide: (i) a broad product range; (ii) frequent, rapid, on-time and complete delivery; (iii) consistency in products and merchandising; (iv) national service; and (v) special order programs enables retail customers to increase comparable store sales and helps to differentiate us from our competitors. We believe investments in innovative new product manufacturing and distribution capabilities, coupled with an ongoing commitment to operational excellence, provide a strong platform for future growth.

Our reportable segments are organized and managed principally by end market: North American Residential, Europe and Architectural. In the three months ended April ~~4, 2021,~~3, 2022, we generated net sales of ~~$476.5~~$568.6 million or ~~73.7%~~78.3%, ~~$88.5~~$80.5 million or ~~13.7%~~11.1% and ~~$75.0~~$71.0 million or ~~11.6%~~9.8% in our North American Residential, Europe and Architectural segments, respectively.

~~The~~At the start of the first quarter, we experienced labor constraints from absenteeism related to the Omicron variant of COVID-19, ~~pandemic~~which began to abate as the quarter progressed. In addition, logistics constraints and supply chain disruptions further reduced production in some of our facilities and impacted our ~~business operations~~ability to service customers. Rising energy and ~~financial results beginning in~~fuel costs, partly attributable to the ~~second quarter of fiscal year 2020~~war between Russia and ~~continues~~Ukraine, along with rising interest rates and global inflation also continue to impact ~~us in fiscal year 2021.~~our business. The extent to which ~~the COVID-19 pandemic impacts~~labor and logistics constraints, supply chain disruptions, rising energy and fuel costs, interest rates and global inflation impact our business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted. These impacts include, but are not limited to, the duration, spread, severity and impact of the COVID-19 pandemic, the effects of the COVID-19 pandemic on our employees, operations, customers, suppliers and supply chain, the remedial actions and stimulus measures adopted by federal, state and local governments and the extent to which normal economic and operating conditions can resume. Uncertainty associated with future forecasts, demand in the Architectural market and the duration of impacts from COVID-19 may impact our judgments and estimates and affect, among other things, our goodwill, long-lived assets and indefinite-lived intangible asset valuation,

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~~annual effective tax rate and inventory valuation, and may result in the need to write down goodwill in the Architectural reporting unit to its fair value in the future.~~

For discussion regarding the impact of COVID-19 and related economic conditions on our results for the year ended January 3, 2021, see Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations” in in our Annual Report on Form 10-K for the year ended January 3, 2021. For further discussion regarding the potential future impacts of COVID-19 and related economic conditions on the Company, see “Risks Related to COVID-19” included in Part I, Item 1A, "Risk Factors” in our 2020 Annual Report.

Key Factors Affecting Our Results of Operations

Product Demand

There are numerous factors that influence overall market demand for our products. Demand for new homes, home improvement products and other building construction products have a direct impact on our financial condition and results of operations. Demand for our products may be impacted by changes in United States, Canadian, European, Asian or other global economic conditions, including inflation, deflation, interest rates, availability of capital, consumer spending rates, energy availability and costs, and the effects of governmental initiatives to manage economic conditions. Additionally, trends in residential new construction, repair, renovation and remodeling and architectural building construction may directly impact our financial performance. Accordingly, the following factors may have a direct impact on our business in the countries and regions in which our products are sold:

•the strength of the economy;

•the amount and type of residential and commercial construction;

•housing sales and home values;

•the age of existing home stock, home vacancy rates and foreclosures;

•non-residential building occupancy rates;

•increases in the cost of raw materials or wages or any shortage in supplies or labor;

•the availability and cost of credit;

•employment rates and consumer confidence; and

•demographic factors such as immigration and migration of the population and trends in household formation.

Product Pricing and Mix

The building products industry is highly competitive and we therefore face pressure on sales prices of our products. In addition, our competitors may adopt more aggressive sales policies and devote greater resources to the development, promotion and sale of their products than we do, which could result in a loss of customers. Our business in general is subject to changing consumer and industry trends, demands and preferences. Trends within the industry change often and our failure to anticipate, identify or quickly react to changes in these trends could lead to, among other things, rejection of a new product line and reduced demand and price reductions for our products, which could materially adversely affect us. Changes in consumer preferences may also lead to increased demand for our lower margin products relative to our higher margin products, which could reduce our future profitability.

Business Wins and Losses

Our customers consist mainly of wholesalers and retail home centers. ~~In fiscal year 2020, our top ten customers together accounted for approximately 46% of our net sales and our top customer, The Home Depot, Inc. accounted for approximately 18% of our net sales.~~ Net sales from customers that have accounted for a significant portion of our net sales in past periods, individually or as a group, may not continue in future periods, or if continued, may not reach or exceed historical levels in any period. Certain customers perform periodic product line reviews to assess their product offerings, which have, on past occasions, led to business wins and losses. In addition, as a result of competitive bidding processes, we may not be able to increase or maintain the margins at which we sell our products to our customers.

Organizational Restructuring

Over the past several years, we have engaged in a series of restructuring programs related to exiting certain geographies and non-core businesses, consolidating certain internal support functions and engaging in other actions

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designed to reduce our cost structure and improve productivity. These initiatives primarily consist of severance actions and lease termination costs. Management continues to evaluate our business; therefore, in future years, there may be additional provisions for new plan initiatives, as well as changes in previously recorded estimates, as payments are made or actions are completed. Asset impairment charges were also incurred in connection with these restructuring actions for those assets sold, abandoned or made obsolete as a result of these programs.

In May 2021, we initiated further actions to improve overall business performance that includes the reorganization of our specialty door manufacturing capacity in our Architectural reportable segment. The reorganization of our manufacturing capacity involves specific facilities in the Architectural segment and costs associated with the reorganization of these facilities, which resulted in the closure of one existing stile and rails facility and related

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headcount reductions beginning in the second quarter of 2021 (collectively, the "2021 Plan"). Costs associated with the 2021 Plan include severance and closure charges and continued through 2021. The actions taken as part of the 2021 Plan are expected to increase our annual earnings and cash flows by approximately $2 million.

In November 2020, we began implementing a plan to improve overall business performance that includes the reorganization of our manufacturing capacity and a reduction of our overhead and selling, general and administration workforce primarily in our Architectural reportable segment as well as limited actions in the North American Residential reportable segment. The reorganization of our manufacturing capacity involves specific facilities in the Architectural segment and costs associated with the closure of these facilities and related headcount reductions began taking place in the fourth quarter of 2020 (collectively, the "2020 Plan"). Costs associated with the 2020 Plan include severance and closure charges and ~~will continue~~continued through 2021. ~~As of April 4, 2021, we expect to incur approximately $3 million to $4 million of additional charges related to the 2019 Plan. Once fully implemented, the~~The actions taken as part of the 2020 Plan are expected to increase our annual earnings and cash flows by approximately $2$3 million.

In February 2019, we began implementing a plan to improve overall business performance that includes the reorganization of our manufacturing capacity and a reduction of our overhead and selling, general and administration workforce across all of our reportable segments and in our head offices. The reorganization of our manufacturing capacity involves specific plants in the North American Residential and Architectural segments and costs associated with the closure of these plants and related headcount reductions began taking place in the first quarter of 2019 (collectively, the "2019 Plan"). Costs associated with the 2019 Plan include severance, retention and closure charges and ~~will continue~~continued through 2020. ~~As of April 4, 2021, we expect to incur approximately $1 million to $2 million of additional charges related to the 2019 Plan. Once fully implemented, the~~The actions taken as part of the 2019 Plan are ~~expected to increase our~~substantially complete and the annual earnings and cash ~~flows by approximately $17 million to $21 million.~~

During the fourth quarter of 2018, we began implementing a plan to reorganize and consolidate certain aspects of our United Kingdom head office function and optimize our portfolio by divesting non-core assets to enable more effective and consistent business processesflow savings realized were materially in the Europe segment. In addition, in the North American Residential segment we announced a new facility that will optimize and expand capacity through increased automation, which resulted in the closure of one existing facility and related headcount reductions beginning in the second quarter of 2019 (collectively, the “2018 Plan”). Costs associatedline with ~~the 2018 Plan included severance, retention and closure charges and continued throughout 2019. As of April 4, 2021, we do not expect to incur any material future charges related to the 2018 Plan.~~expectations.

Inflation

In 2021 and the first quarter of ~~2021,~~2022, we realized higher costs in the wood, resins, metals and packaging product ~~category~~categories as a result of macroeconomic factors as well as increased ~~freight~~logistics costs, ~~and wages. Additionally, we continued to recognize higher costs from previously disclosed~~wages, anti-dumping and countervailing ~~duties.~~duties and energy and fuel costs. Additionally, rising interest rates may impact the ability of end consumers to purchase our products. We expect the macroeconomic pressures on wood, resins and other certain key product categories and supply chain costs will continue ~~throughout~~at least through the remainder of fiscal year ~~2021.~~2022. Our profitability, margins and net sales could be adversely affected if we are not able to pass these costs on to our customers or otherwise mitigate the impact of these inflationary pressures.

Seasonality

Our business is moderately seasonal and our net sales vary from quarter to quarter based upon the timing of the building season in our markets. Severe weather conditions in any quarter, such as unusually prolonged warm or cold conditions, rain, blizzards or hurricanes, could accelerate, delay or halt construction and renovation activity.

Acquisitions and Divestitures

We are pursuing a strategic initiative of optimizing our global business portfolio. ~~As part~~On a continual basis, we evaluate and consider strategic acquisitions, divestitures and joint ventures to create shareholder value and enhance financial performance.

On June 14, 2021, we completed the sale of all of the capital stock of our Czech business ("Czech") for consideration of $7.0 million, net of cash disposed. The divestiture of this ~~strategy,~~business resulted in a loss on sale of subsidiaries of $8.6 million, which was recognized during the second quarter of 2021 in the last several years we have pursued strategic acquisitions targeting companies who produce components for our existing operations, manufacture niche products and provide value-added services. Additionally, we target companies with strong brands, complementary technologies, attractive geographic footprints and opportunities for cost and distribution synergies. We also continuously analyze our operations to determine which businesses, market channels and products create the most value for our customers and acceptable returns for our shareholders.Europe segment.

2018

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Results of Operations


	Three Months Ended
(In thousands)	April 3, 2022			April 4, 2021
Net sales	$	726,217		$	646,337
Cost of goods sold	541,968			487,699
Gross profit	184,249			158,638
Gross profit as a % of net sales	25.4		%	24.5		%
Selling, general and administration expenses	83,246			83,631
Selling, general and administration expenses as a % of net sales	11.5		%	12.9		%
Restructuring (benefit) costs	(19)			1,643


Operating income	101,022			73,364
Interest expense, net	10,239			11,946

Other (income) expense, net	(1,415)			(1,343)
Income before income tax expense	92,198			62,761
Income tax expense	23,477			14,613
Net income	68,721			48,148
Less: net income attributable to non-controlling interests	1,139			1,167
Net income attributable to Masonite	$	67,582		$	46,981

Three Months Ended April 3, 2022, Compared with Three Months Ended April 4, 2021

Net Sales

Net sales in the three months ended April 3, 2022, were $726.2 million, an increase of $79.9 million or 12.4% from $646.3 million in the three months ended April 4, 2021. Foreign exchange rate fluctuations negatively impacted net sales in the first quarter of 2022 by $3.0 million. Excluding this exchange rate impact, net sales would have increased by $82.9 million or 12.8% due to changes in volume, average unit price, impact of acquisitions and divestitures, and sales of components. Average unit price increased net sales in the first quarter of 2022 by $99.9 million or 15.5% compared to the 2021 period. Lower volumes excluding the incremental impact of acquisitions and divestitures ("base volume") decreased net sales by $8.9 million or 1.4% in the first quarter of 2022 compared to the 2021 period. Our 2021 divestiture decreased net sales by $6.3 million or 1.0% in the three months ended of 2022. Net sales of components to external customers decreased $1.8 million or 0.3% in the first quarter of 2022 compared to the 2021 period.

Net Sales and Percentage of Net Sales by Reportable Segment


	Three Months Ended April 3, 2022
(In thousands)	North American Residential			Europe			Architectural			Corporate & Other		Total
Sales	$	569,429		$	81,839		$	74,659		$	6,196	$	732,123
Intersegment sales	(865)			(1,371)			(3,670)			—		(5,906)
Net sales to external customers	$	568,564		$	80,468		$	70,989		$	6,196	$	726,217
Percentage of consolidated external net sales	78.3		%	11.1		%	9.8		%

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~~Acquisitions~~

•OnDecember 4, 2020, we completed the acquisition of a Lowe's Companies, Inc. door fabrication facility in the United States for cash consideration of $3.9 million. During the first quarter of 2021, as a result of working capital adjustments we paid an additional $0.2 million.

•~~On August 31, 2020, we acquired intellectual property and other assets related to an interior door technology for cash consideration of $1.9 million.~~

~~Divestitures~~

•~~During the second quarter of 2020, we completed the liquidation of our legal entity in India. As a result, we recognized $2.1 million in loss on disposal of subsidiaries.~~

~~Results of Operations~~

Three Months Ended
(In thousands) April 4, 2021 March 29, 2020
Net sales $ 646,337 $ 551,228
Cost of goods sold 487,699 416,947
Gross profit 158,638 134,281
Gross profit as a % of net sales 24.5 % 24.4 %
Selling, general and administration expenses 83,631 80,333
Selling, general and administration expenses as a % of net sales 12.9 % 14.6 %
Restructuring costs 1,643 1,941
Operating income 73,364 52,007
Interest expense, net 11,946 11,282
Other (income) expense, net (1,343) 49
Income before income tax expense 62,761 40,676
Income tax expense 14,613 9,639
Net income 48,148 31,037
Less: net income attributable to non-controlling interests 1,167 1,152
Net income attributable to Masonite $ 46,981 $ 29,885

~~Three Months Ended April 4, 2021, Compared with Three Months Ended March 29, 2020~~

~~Net Sales~~

Net sales in the three months ended April 4, 2021, were $646.3 million, an increase of $95.1 million or 17.3% from $551.2 million in the three months ended March 29, 2020. Net sales in the first quarter of 2021 were positively impacted by $11.3 million as a result of foreign exchange rate fluctuations. Excluding this exchange rate impact, net sales would have increased by $83.8 million or 15.2% due to changes in volume, average unit price and sales of components and other products. Average unit price increased net sales in the first quarter of 2021 by $76.3 million or 13.8% compared to the 2020 period. Net sales of components and other products to external customers increased $5.6 million or 1.0% in the first quarter of 2021 compared to the 2020 period. Higher volumes excluding the incremental impact of acquisitions and divestitures ("base volume") increased net sales by $1.9 million or 0.3% in the first quarter of 2021 compared to the 2020 period.

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~~Net Sales and Percentage of Net Sales by Reportable Segment~~


	Three Months Ended April 4, 2021
(In thousands)	North American Residential			Europe			Architectural			Corporate & Other		Total
Sales	$	477,229		$	90,206		$	78,074		$	6,343	$	651,852
Intersegment sales	(765)			(1,667)			(3,083)			—		(5,515)
Net sales to external customers	$	476,464		$	88,539		$	74,991		$	6,343	$	646,337
Percentage of consolidated external net sales	73.7		%	13.7		%	11.6		%

Three Months Ended March 29, 2020
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Sales $ 384,445 $ 71,156 $ 94,555 $ 5,427 $ 555,583
Intersegment sales (588) (430) (3,337) — (4,355)
Net sales to external customers $ 383,857 $ 70,726 $ 91,218 $ 5,427 $ 551,228
Percentage of consolidated external net sales 69.6 % 12.8 % 16.5 %

North American Residential

Net sales to external customers from facilities in the North American Residential segment in the three months ended April ~~4, 2021,~~3, 2022, were ~~$476.5~~$568.6 million, an increase of ~~$92.6~~$92.1 million or ~~24.1%~~19.3% from ~~$383.9~~$476.5 million in the three months ended ~~March 29, 2020. Net~~April 4, 2021. Foreign exchange rate fluctuations negatively impacted net sales in the first quarter of ~~2021 were positively impacted~~2022 by ~~$4.4 million as a result of foreign exchange rate fluctuations.~~$0.2 million. Excluding this exchange rate impact, net sales would have increased by ~~$88.2~~$92.3 million or ~~23.0%~~19.4% due to changes in volume, average unit price and sales of ~~components and other products.~~components. Average unit price increased net sales in the first quarter of ~~2021~~2022 by ~~$66.9~~$79.5 million or ~~17.4%~~16.7% compared to the ~~2020~~2021 period. Higher base volume increased net sales in the first quarter of ~~2021~~2022 by ~~$17.3~~$12.4 million or ~~4.5%~~2.6% compared to the ~~2020~~2021 period. Net sales of components ~~and other products~~ to external customers were ~~$4.0~~$0.4 million higher in the first quarter of ~~2021~~2022 compared to the ~~2020~~2021 period.

Europe

Net sales to external customers from facilities in the Europe segment in the three months ended April ~~4, 2021,~~3, 2022, were ~~$88.5~~$80.5 million, ~~an increase~~a decrease of ~~$17.8~~$8.0 million or ~~25.2%~~9.0% from ~~$70.7~~$88.5 million in the three months ended ~~March 29, 2020. Net~~April 4, 2021. Foreign exchange rate fluctuations negatively impacted net sales in the first quarter of ~~2021 were positively impacted~~2022 by ~~$6.4 million as a result of foreign exchange fluctuations.~~$2.7 million. Excluding this exchange rate impact, net sales would have ~~increased~~decreased by ~~$11.4~~$5.3 million or ~~16.1%~~6.0% due to changes in volume, average unit price, divestitures and sales of ~~components and other products.~~components. Lower base volume decreased net sales by $13.8 million or 15.6% in the first quarter of 2022 compared to the 2021 period due to demand softness driven by weakening consumer confidence in the United Kingdom, which is affecting major purchase decisions. Our 2021 divestiture decreased net sales by $6.3 million or 7.1% in the first quarter of 2022. Average unit price increased net sales in the first quarter of ~~2021~~2022 by ~~$5.0~~$14.1 million or ~~7.1%~~15.9% compared to the ~~2020 period. Higher base volume increased net sales by $4.9 million or 6.9% in the first quarter of~~ 2021 ~~compared to the 2020~~ period. Net sales of components ~~and other products~~ to external customers were ~~$1.5~~$0.7 million higher in the first quarter of ~~2021~~2022 compared to the ~~2020~~2021 period.

Architectural

Net sales to external customers from facilities in the Architectural segment in the three months ended April ~~4, 2021,~~3, 2022, were ~~$75.0~~$71.0 million, a decrease of ~~$16.2~~$4.0 million or ~~17.8%~~5.3% from ~~$91.2~~$75.0 million in the three months ended March 29, 2020. Net sales in the first quarter of 2021 were positively impacted by $0.5 million as a result of foreign exchange fluctuations. Excluding this exchange rate impact, net sales would have decreased by $16.7 million or 18.3% due to changes in volume, average unit price and sales of components and other products.April 4, 2021. Lower base volume decreased net sales in the first quarter of ~~2021~~2022 by ~~$19.7~~$7.5 million or ~~21.6%~~10.0% compared to the ~~2020~~2021 period due to ~~weakness in commercial end markets.~~the impacts of labor constraints as a result of COVID-19, material availability and production challenges. Net sales of components ~~and other products~~ to external customers were ~~$1.4~~$2.9 million lower in the first

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quarter of ~~2021~~2022 compared to the ~~2020~~2021 period. Average unit price increased net sales in the first quarter of ~~2021~~2022 by ~~$4.4~~$6.4 million or ~~4.8%~~8.5% compared to the ~~2020~~2021 period.

Cost of Goods Sold

Cost of goods sold as a percentage of net sales was ~~75.5%~~74.6% and ~~75.6%~~75.5% for the three months ended April 3, 2022, and April 4, 2021, ~~and March 29, 2020,~~ respectively. ~~Direct~~Overhead, direct labor, distribution and depreciation as a percentage of sales ~~in the first quarter of 2021~~ decreased by ~~0.7%~~1.3%, 0.9%, 0.1% and ~~0.5%~~0.1%, respectively, compared to the first quarter of ~~2020. Distribution, overhead and material~~2021. Material cost of sales as a percentage of net sales increased by ~~0.6%, 0.4%, 0.1% respectively,~~1.5% compared to the ~~2020~~2021 period. Overhead as a percentage of net sales decreased due to higher average unit prices, partially offset by wage inflation, higher factory costs and increased plant maintenance as compared to the 2021 period. Direct labor as a percentage of net sales decreased due to higher average unit prices, partially offset by production inefficiencies related to labor constraints and manufacturing wage inflation. The decrease in depreciation as a percentage of net sales was driven by higher average unit prices as compared to the ~~2020~~2021 period. Distribution as a percentage of net sales ~~increased~~decreased due to ~~higher freight costs and higher personnel costs including wage inflation. Overhead as a percentage of net sales increased due to wage inflation and increased plant maintenance, partially offset by~~ higher average unit prices, ~~as compared to the 2020 period.~~partially offset by increased logistics and personnel costs. The increase in material cost of sales as a percentage of net sales was driven by commodity

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inflation and an increase in logistics costs and tariffs, ~~and freight costs, largely~~partially offset by higher average unit prices and material cost savings projects.

Selling, General and Administration Expenses

In the three months ended April ~~4, 2021,~~3, 2022, selling, general and administration ("SG&A") expenses, as a percentage of net sales, were ~~12.9%~~11.5%, as compared to ~~14.6%~~12.9% in the three months ended ~~March 29, 2020,~~April 4, 2021, a decrease of ~~170~~140 basis points.

SG&A expenses in the three months ended April ~~4, 2021,~~3, 2022, were ~~$83.6~~$83.2 million, ~~an increase~~a decrease of ~~$3.3~~$0.4 million from ~~$80.3~~$83.6 million in the three months ended ~~March 29, 2020.~~April 4, 2021. The overall ~~increase~~decrease was driven by a $6.8 million increase in personnel costs primarily due to $3.9 million of resource investments to support growth, $1.5 million of payroll taxes due to timing of prior year incentive compensation and $1.4 million of incentive compensation, as well as unfavorable foreign exchange impacts of $1.2 million. These increases were partially offset by a $2.3 million decrease in professional and other fees, a $2.1 million decrease in travel expense and a $0.3$3.8 million decrease in non-cash items in SG&A ~~expenses,~~expenses; including loss (gain) on disposal of property, plant and equipment, deferred compensation, depreciation and amortization ~~deferred compensation~~ and share based ~~compensation.~~compensation; incremental SG&A savings from our 2021 divestiture of $0.5 million and foreign exchange impacts of $0.3 million. These decreases were partially offset by a $2.3 million increase in personnel costs primarily driven by increased incentive compensation, wage and benefit inflation and resource investments to support growth; a $1.4 million increase in travel expense as business activities fully returned to pre-pandemic levels; and a $0.5 million increase in professional and other fees.

Restructuring (Benefit) Costs

Restructuring (benefit) costs in the three months ended April ~~4, 2021, and March 29, 2020,~~3, 2022, were minimal, compared to $1.6 million ~~and $1.9 million, respectively. Restructuring costs~~ in the ~~current year related primarily to the 2020 and 2019 Plans.~~three months ended April 4, 2021. Restructuring costs in the prior year period related primarily to the 2020 and 2019 ~~Plan.~~Plans.

Interest Expense, Net

Interest expense, net, in the three months ended April ~~4, 2021,~~3, 2022, was ~~$11.9~~$10.2 million, compared to ~~$11.3~~$11.9 million in the three months ended ~~March 29, 2020, remaining relatively flat as compared~~April 4, 2021. The decrease in interest expense, net is primarily due to the ~~2020 period.~~refinancing of our senior notes in 2021.

Other (Income) Expense, Net

Other (income) expense, net includes profits and losses related to our non-majority owned unconsolidated subsidiaries that we recognize under the equity method of accounting, unrealized gains and losses on foreign currency remeasurements, pension settlement charges and other miscellaneous non-operating expenses. Other (income) expense, net, in the three months ended April ~~4, 2021,~~3, 2022, was ~~$1.3~~$1.4 million of income, compared to ~~minimal expense~~$1.3 million of income in the three months ended ~~March 29, 2020. The change in other (income) expense, net is primarily due~~April 4, 2021, remaining relatively flat as compared to ~~a change in~~ the fair value of plan assets in the deferred compensation rabbi trust, partially offset by a change in our portion of the net gains and losses related to our non-majority owned unconsolidated subsidiaries that are recognized under the equity method of accounting.2021 period.

Income Tax Expense

Income tax expense in the three months ended April ~~4, 2021,~~3, 2022, was ~~$14.6~~$23.5 million, compared to ~~$9.6~~$14.6 million ~~of income tax expense~~ in the three months ended ~~March 29, 2020.~~April 4, 2021. The increase in income tax expense is primarily due to the mix of income or losses within the tax jurisdictions with various tax rates in which we operate. ~~We recognized~~

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~~discrete items resulting in $0.5 million of income tax benefit in the three months ended April 4, 2021, compared to $0.4 million of income tax benefit in the three months ended March 29, 2020.~~

Segment Information


	Three Months Ended April 3, 2022
(In thousands)	North American Residential			Europe			Architectural			Corporate & Other		Total
Adjusted EBITDA	$	127,667		$	11,843		$	(2,898)		$	(11,860)	$	124,752
Adjusted EBITDA as a percentage of segment net sales	22.5		%	14.7		%	(4.1)		%			17.2		%


	Three Months Ended April 4, 2021
(In thousands)	North American Residential			Europe			Architectural			Corporate & Other		Total
Adjusted EBITDA	$	94,482		$	16,755		$	1,994		$	(11,206)	$	102,025
Adjusted EBITDA as a percentage of segment net sales	19.8		%	18.9		%	2.7		%			15.8		%

Three Months Ended March 29, 2020
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Adjusted EBITDA $ 71,696 $ 9,679 $ 10,582 $ (10,440) $ 81,517
Adjusted EBITDA as a percentage of segment net sales 18.7 % 13.7 % 11.6 % 14.8 %

The following reconciles net income (loss) attributable to Masonite to Adjusted EBITDA:

Three Months Ended April 4, 2021
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Net income (loss) attributable to Masonite $ 83,973 $ 11,408 $ (3,813) $ (44,587) $ 46,981
Plus:
Depreciation 9,511 2,585 2,663 3,520 18,279
Amortization 415 2,885 1,142 476 4,918
Share based compensation expense — — — 4,418 4,418
Loss (gain) on disposal of property, plant and equipment 88 (4) 149 (830) (597)
Restructuring costs (361) — 1,853 151 1,643
Interest expense, net — — — 11,946 11,946
Other (income) expense, net — (119) — (1,224) (1,343)
Income tax expense — — — 14,613 14,613
Net income attributable to non-controlling interest 856 — — 311 1,167
Adjusted EBITDA $ 94,482 $ 16,755 $ 1,994 $ (11,206) $ 102,025


	Three Months Ended April 3, 2022
(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total
Net income (loss) attributable to Masonite	$	117,033	$	5,732	$	(2,826)	$	(52,357)	$	67,582
Plus:
Depreciation	9,964		2,341		2,879		2,088		17,272
Amortization	619		3,270		182		541		4,612
Share based compensation expense	—		—		—		4,719		4,719
Loss (gain) on disposal of property, plant and equipment	338		(12)		(3,180)		—		(2,854)
Restructuring (benefit) costs	(91)		6		47		19		(19)


Interest expense, net	—		—		—		10,239		10,239

Other (income) expense, net	(790)		506		—		(1,131)		(1,415)
Income tax expense	—		—		—		23,477		23,477

Net income attributable to non-controlling interest	594		—		—		545		1,139
Adjusted EBITDA	$	127,667	$	11,843	$	(2,898)	$	(11,860)	$	124,752

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		Three Months Ended March 29, 2020											Three Months Ended April 4, 2021
(In thousands)	(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total		(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total
Net income (loss) attributable to Masonite	Net income (loss) attributable to Masonite	$	58,811	$	3,483	$	4,580	$	(36,989)	$	29,885	Net income (loss) attributable to Masonite	$	83,973	$	11,408	$	(3,813)	$	(44,587)	$	46,981
Plus:	Plus:											Plus:
Depreciation	Depreciation	9,364		2,457		2,822		1,375		16,018		Depreciation	9,511		2,585		2,663		3,520		18,279
Amortization	Amortization	595		3,562		1,922		380		6,459		Amortization	415		2,885		1,142		476		4,918
Share based compensation expense	Share based compensation expense	—		—		—		3,470		3,470		Share based compensation expense	—		—		—		4,418		4,418
Loss on disposal of property, plant and equipment		1,204		3		396		19		1,622
Loss (gain) on disposal of property, plant and equipment												Loss (gain) on disposal of property, plant and equipment	88		(4)		149		(830)		(597)
Restructuring costs	Restructuring costs	849		(37)		862		267		1,941		Restructuring costs	(361)		—		1,853		151		1,643

Interest expense, net	Interest expense, net	—		—		—		11,282		11,282		Interest expense, net	—		—		—		11,946		11,946

Other expense (income), net		—		211		—		(162)		49
Other (income) expense, net												Other (income) expense, net	—		(119)		—		(1,224)		(1,343)
Income tax expense	Income tax expense	—		—		—		9,639		9,639		Income tax expense	—		—		—		14,613		14,613

Net income attributable to non-controlling interest	Net income attributable to non-controlling interest	873		—		—		279		1,152		Net income attributable to non-controlling interest	856		—		—		311		1,167
Adjusted EBITDA	Adjusted EBITDA	$	71,696	$	9,679	$	10,582	$	(10,440)	$	81,517	Adjusted EBITDA	$	94,482	$	16,755	$	1,994	$	(11,206)	$	102,025

Adjusted EBITDA in our North American Residential segment ~~increased $22.8~~was $127.7 million in the three months ended April 3, 2022, an increase of $33.2 million, or ~~31.8%~~35.1%, tofrom $94.5 million in the three months ended April 4, ~~2021, from $71.7 million in the three months ended March 29, 2020.~~2021. Adjusted EBITDA in the North American Residential segment included corporate allocations of shared costs of ~~$19.2~~$22.5 million and ~~$16.3~~$19.2 million, in the first quarter of ~~2021~~2022 and ~~2020,~~2021, respectively. The allocations generally consist of certain costs of human resources, legal, finance, information technology, research and development, marketing and share based compensation.

Adjusted EBITDA in our Europe segment ~~increased $7.1~~was $11.8 million in the three months ended April 3, 2022, a decrease of $4.9 million, or ~~73.2%~~29.3%, tofrom $16.8 million in the three months ended April 4, ~~2021, from $9.7 million in the three months ended March 29, 2020.~~2021. Adjusted EBITDA in the Europe segment included corporate allocations of shared costs of ~~$1.0~~$1.7 million and ~~$0.3~~$1.0 million, in the first quarter of ~~2021~~2022 and ~~2020,~~2021, respectively. The allocations generally consist of certain costs of human resources, legal, finance, information technology, marketing and share based compensation.

Adjusted EBITDA in our Architectural segment ~~decreased $8.6 million, or 81.1%, to $2.0~~was a loss of $2.9 million in the three months ended April ~~4, 2021,~~3, 2022, a decrease of $4.9 million, or 245.3%, from ~~$10.6~~$2.0 million of earnings in the three months ended ~~March 29, 2020.~~April 4, 2021. Adjusted EBITDA in the Architectural segment also included corporate allocations of shared costs of ~~$2.8~~$2.9 million and ~~$2.7~~$2.8 million, in the first quarter of ~~2021~~2022 and ~~2020,~~2021, respectively. The allocations generally consist of certain costs of human resources, legal, finance, information technology, research and development, marketing and share based compensation.

Liquidity and Capital Resources

Our liquidity needs for operations vary throughout the year. Our principal sources of liquidity are cash flows from operating activities, the borrowings under our ABL Facility and an accounts receivable sales program with a third party ("AR Sales Program") ~~and~~, as well as our existing cash balance. Our anticipated uses of cash in the near term include working capital needs, capital expenditures for critical maintenance, safety and regulatory projects, and share repurchases. On a continual basis, we evaluate and consider strategic acquisitions, divestitures, and joint ventures to create shareholder value and enhance financial performance.

We believe that our cash balance on hand, future cash generated from operations, the use of our AR Sales Program, our ABL Facility, and ability to access the capital markets will provide adequate liquidity for the foreseeable future. As of April ~~4, 2021,~~3, 2022, we had ~~$323.2~~$183.5 million of cash and cash equivalents, availability under our ABL Facility of ~~$220.5~~$257.7 million and availability under our AR Sales Program of ~~$30.0~~$2.2 million.

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Cash Flows

Cash used in operating activities was ~~$14.3~~$37.8 million during the three months ended April ~~4, 2021,~~3, 2022, compared to ~~$6.0~~$14.3 million ~~of cash provided by operating activities~~ in the three months ended ~~March 29, 2020.~~April 4, 2021. This ~~$20.4~~$23.5 million ~~decrease~~increase in cash ~~provided by~~used in operating activities was due to changes in net working capital, ~~and a $16.0 million decrease in other assets and liabilities,~~ partially offset by a ~~$21.1~~$14.4 million increase in net income attributable to Masonite, adjusted for non-cash and non-operating items, and a $12.3 million increase in other assets and liabilities in the first three months of ~~2021~~2022 compared to the same period in ~~2020.~~2021.

Cash used in investing activities was ~~$12.3~~$13.3 million during the three months ended April ~~4, 2021,~~3, 2022, compared to ~~$17.8~~$12.3 million in the three months ended ~~March 29, 2020.~~April 4, 2021. This ~~$5.5~~$1.0 million ~~decrease~~increase in cash used in investing activities was driven by a ~~$3.3~~$5.2 million ~~decrease~~increase in cash additions to property, plant and equipment, ~~and~~partially offset by a ~~$2.3~~$4.1 million increase in proceeds from the sale of property, plant and equipment ~~partially offset by~~and a $0.1 million ~~increase~~decrease in cash used in acquisitions, net of cash acquired and other investing activities in the first three months of ~~2021~~2022 compared to the same period in ~~2020.~~2021.

Cash used in financing activities was $144.3 million during the three months ended April 3, 2022, compared to $14.6 million during the three months ended April 4, ~~2021, compared to $37.0~~2021. This $129.7 million ~~during the three months ended March 29, 2020. This $22.3 million decrease~~increase in cash used in financing activities was driven by a ~~$25.2~~$130.4 million ~~decrease~~increase in cash used for repurchases of common shares and a $0.6 million increase in distributions to non-controlling interests, partially offset by a ~~$1.9~~$1.0 million ~~increase~~decrease in cash used for repayments of long-term debt and a $0.3 million decrease in cash used for tax withholding on share based awards ~~a $0.9 million increase in cash used for repayments of long-term debt and a $0.1 million increase in distributions to non-controlling interests~~ in the first three months of ~~2021~~2022 compared to the same period in ~~2020.~~2021.

Share Repurchases

as part of the new share repurchase program. The Company entered into an ASR transaction during the first quarter of 2022 with a third-party financial institution for the repurchase of $100.0 million of its outstanding common shares. At inception, pursuant to the agreement, the Company paid $100.0 million to the financial institution using cash on hand and received an initial delivery of 848,087 common shares on the same day. However, under the terms of the ASR, the total number of shares delivered and average purchase price paid per share will be determined upon settlement based on the volume-weighted average price ("VWAP") over the term of the ASR, less an agreed upon discount. The final settlement of the transactions under the ASR is expected to occur during or prior to the third quarter of 2022. During the three months ended April 3, 2022, we repurchased 1,236,330 of our common shares in the open market at an aggregate cost of $140.0 million as part of the share repurchase programs and ASR. During the three months ended April 4, 2021, we repurchased ~~and retired~~ 84,983 of our common shares in the open market at an aggregate cost of $9.6 million as part of the share repurchase programs. During the three months ended March 29, 2020, we repurchased 567,271 of our common shares in the open market at an aggregate cost of $34.8 million, prior to temporarily suspending our repurchase program on March 18, 2020.million. As of April ~~4, 2021,~~3, 2022, there was ~~$90.7~~$256.4 million available for repurchase in accordance with the share repurchase programs.

Other Liquidity Matters

Our cash and cash equivalents balance includes cash held in foreign countries in which we operate. Cash held outside Canada, in which we are incorporated, is free from significant restrictions that would prevent the cash from being accessed to meet our liquidity needs including, if necessary, to fund operations and service debt obligations in Canada. However, earnings from certain jurisdictions are indefinitely reinvested in those jurisdictions. Upon the repatriation of any earnings to Canada, in the form of dividends or otherwise, we may be subject to Canadian income taxes and withholding taxes payable to the various foreign countries. As of April ~~4, 2021,~~3, 2022, we do not believe adverse tax consequences exist that restrict our use of cash or cash equivalents in a material manner.

We also routinely monitor the changes in the financial condition of our customers and the potential impact on our results of operations. There has not been a change in the financial condition of any customer that has had a material adverse effect on our results of operations. However, if economic conditions were to deteriorate, it is possible there could be an impact on our results of operations in a future period and this impact could be material.

Accounts Receivable Sales Program

Under the AR Sales Program, we can transfer ownership of eligible trade accounts receivable of certain customers. Receivables are sold outright to a third party who assumes the full risk of collection, without recourse to us in

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MASONITE INTERNATIONAL CORPORATION

the event of a loss. Transfers of receivables under this program are accounted for as sales. Proceeds from the transfers reflect the face value of the accounts receivable less a discount. Receivables sold under the AR Sales Program are excluded from trade accounts receivable in the condensed consolidated balance sheets and are included in cash flows from operating activities in the condensed consolidated statements of cash flows. The discounts on the sales of trade accounts receivable sold, if any, under the AR Sales Program were not material for any of the periods presented and were recorded in selling, general and administration expenses within the condensed consolidated statements of income and comprehensive ~~income (loss).~~income.

3.50% Senior Notes due 2030

~~Table~~On July 26, 2021, we issued $375.0 million aggregate principal senior unsecured notes (the "2030 Notes"), all of ~~Contents~~

~~MASONITE INTERNATIONAL CORPORATION~~

which was outstanding as of April 3, 2022. The 2030 Notes bear interest at 3.50% per annum. The 2030 Notes were issued under an indenture which contains limited covenants that are described in detail in our Annual Report. As of April 3, 2022, we were in compliance with all covenants under the indenture governing the 2030 Notes.

5.375% Senior Notes due 2028

On July 25, 2019, we issued $500.0 million aggregate principal senior unsecured notes (the "2028 Notes"), all of which was outstanding as of April ~~4, 2021.~~3, 2022. The 2028 Notes bear interest at 5.375% per annum. The net proceeds from issuance of the 2028 Notes, together with available cash balances, were used to redeem the remaining $500.0 million aggregate principal amount of similar senior unsecured notes, including the payment of related premiums, fees and expenses. The 2028 Notes were issued under an indenture which contains restrictive covenants that are described in detail in our Annual ~~Report on Form 10-K for the year ended January 3, 2021.~~Report. As of April ~~4, 2021,~~3, 2022, we were in compliance with all covenants under the indenture governing the 2028 ~~Notes.~~

~~5.750% Senior Notes due 2026~~

On August 27, 2018, we issued $300.0 million aggregate principal senior unsecured notes (the "2026 Notes"), all of which were outstanding as of April 4, 2021. The 2026 Notes bear interest at 5.750% per annum. The 2026 Notes were issued under an indenture which contains restrictive covenants that are described in detail in our Annual Report on Form 10-K for the year ended January 3, 2021. As of April 4, 2021, we were in compliance with all covenants under the indenture governing the 2026 Notes.

ABL Facility

On January 31, 2019, we and certain of our subsidiaries entered into a $250.0 million asset-based revolving credit facility (the "ABL Facility") maturing on January 31, 2024, which replaced the previous facility. Borrowings under the ABL Facility bear interest at a rate which is described in more detail in Note 6. The ABL Facility contains various customary representations, warranties by us and covenants that are described in detail in our Annual ~~Report on Form 10-K for the year ended January 3, 2021.~~Report. As of April ~~4, 2021,~~3, 2022, we were in compliance with all covenants under the credit agreement governing the ABL Facility. We had availability of ~~$220.5~~$257.7 million under our ABL Facility and there were no amounts outstanding as of April ~~4, 2021.~~3, 2022.

Supplemental Guarantor Financial Information

Our obligations under the ~~2028~~2030 Notes, ~~and 2026~~2028 Notes and the ABL Facility are fully and unconditionally guaranteed, jointly and severally, by certain of our directly or indirectly wholly-owned subsidiaries. The following unaudited supplemental financial information for our non-guarantor subsidiaries is presented:

Our non-guarantor subsidiaries generated external net sales of ~~$569.2~~$640.6 million and ~~$491.9~~$569.2 million for the three months ended April 3, 2022, and April 4, 2021, ~~and March 29, 2020,~~ respectively. Our non-guarantor subsidiaries generated Adjusted EBITDA of ~~$77.0~~$101.7 million and ~~$68.4~~$77.0 million for the three months ended April 3, 2022, and April 4, 2021, ~~and March 29, 2020,~~ respectively. Our non-guarantor subsidiaries had total assets of ~~$2.2~~$2.3 billion as of April ~~4, 2021,~~3, 2022, and January ~~3, 2021,~~2, 2022, and total liabilities of ~~$943.8~~$962.9 million and ~~$935.3~~$980.6 million as of April ~~4, 2021,~~3, 2022, and January ~~3, 2021,~~2, 2022, respectively.

Changes in Accounting Standards and Policies

Changes in accounting standards and policies are discussed in Note 1. Business Overview and Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reported period.

Please refer to “Critical Accounting Policies and Estimates” described in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report, from which there have been no material changes.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

For our disclosures about market risk, please see Part II, Item 7A. "Quantitative and Qualitative Disclosures about Market Risk," in our Annual ~~Report on Form 10-K for the year ended January 3, 2021.~~Report. We believe there have been no material changes to the information provided therein.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to

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~~MASONITE INTERNATIONAL CORPORATION~~

management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the fiscal quarter covered by this report that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

The information required with respect to this item can be found in Note 7. Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements in this Quarterly Report and is incorporated by reference into this Part II, Item 1. Such information should be read in conjunction with the information contained under Part I, Item 3 "Legal Proceedings" included in our Annual ~~Report on Form 10-K for the year ended January 3, 2021.~~Report.

Item 1A. Risk Factors

You should carefully review and consider the information regarding certain factors which could materially affect our business, financial condition or future results as set forth under Item 1A "Risk Factors" in our Annual ~~Report on Form 10-K filed for the year ended January 3, 2021.~~Report. There have been no material changes from the risk factors disclosed in such Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Unregistered Sale of Equity Securities.

None.

(b) Use of Proceeds.

Not applicable.

During the three months ended April ~~4, 2021,~~3, 2022, we repurchased ~~84,983~~1,236,330 of our common shares in the open market.


	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
January 3, 2022 through January 30, 2022	279,197	$	105.41	279,197	$	366,962,064
January 31, 2022 through February 27, 2022	109,046	96.92		109,046	356,393,262
February 28, 2022 through April 3, 2022	848,087	97.03		848,087	256,393,262
Total	1,236,330	$	98.91	1,236,330

Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs
January 4, 2021, through January 31, 2021 200 $ 92.99 200 $ 100,304,106
February 1, 2021, through February 28, 2021 — — — 100,304,106
March 1, 2021, through April 4, 2021 84,783 113.03 84,783 90,720,911
Total 84,983 $ 112.98 84,983

~~We currently have in place a $600.0~~The Company's Board of Directors has approved five share repurchase authorizations, the most recent being an incremental $200.0 million share repurchase ~~authorization, stemming from three separate authorizations by our~~program approved on February 21, 2022. In addition, the Company announced that its Board of ~~Directors.~~Directors authorized it to enter into an accelerated share repurchase ("ASR") transaction as part of the new share repurchase program. The Company entered into an ASR transaction during the first quarter of 2022 with a third-party financial institution for the repurchase of $100.0 million of its outstanding common shares. At inception, pursuant to the agreement, the Company paid $100.0 million to the financial institution using cash on hand and received an initial delivery of 848,087 common shares on the same day. However, under the terms of the ASR, the total number of shares delivered and average purchase price paid per share will be determined upon settlement based on the volume-weighted average price ("VWAP") over the term of the ASR, less an agreed upon discount. The final settlement of the transactions under the ASR is expected to occur during or prior to the third quarter of 2022. The share repurchase programs have no specified end date and the timing and amount of any share repurchases will be determined by management based on our evaluation of market conditions and other factors. As of April ~~4, 2021, $90.7~~3, 2022, $256.4 million was available for repurchase in accordance with the share repurchase programs.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

The following is a list of all exhibits filed or furnished as part of this report:


Exhibit No.		Description
3.1		Amended and Restated Articles of Masonite International Corporation (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K (File No. 001-11796) filed with the Securities and Exchange Commission on February 26, 2015)
10.1 #		~~Amended and Restated Employment Agreement,~~Confirmation for Fixed Dollar Accelerated Share Repurchase Transaction, dated as of ~~December 31, 2018,~~February 28, 2022, by and between Masonite International Corporation and ~~Robert E. Lewis~~Morgan Stanley & Co. LLC (incorporated by reference to Exhibit ~~10.3~~10.1 to the Company's Current Report on Form 8-K (File No. 011-11796) filed with the Securities and Exchange Commission on ~~December 31, 2018~~March 2, 2022)
31.1*		Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Periodic Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*		Interactive Data Files pursuant to Rule 405 of Regulation S-T formatted in Inline Extensible Business Reporting Language ("Inline XBRL"): (i) the Registrant's Condensed Consolidated Statements of Income and Comprehensive Income ~~(Loss)~~ for the three months ended April 3, 2022, and April 4, ~~2021, and March 29, 2020;~~2021; (ii) the Registrant's Condensed Consolidated Balance Sheets as of April ~~4, 2021,~~3, 2022, and January ~~3, 2021;~~2, 2022; (iii) the Registrant's Condensed Consolidated Statements of Changes in Equity for the three months ended April 3, 2022, and April 4, ~~2021, and March 29, 2020;~~2021; (iv) the Registrant's Condensed Consolidated Statements of Cash Flows for the three months ended April 3, 2022, and April 4, ~~2021, and March 29, 2020;~~2021; and (v) the notes to the Registrant's Condensed Consolidated Financial Statements
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*	Filed or furnished herewith.
#	Denotes management contract or compensatory plan.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MASONITE INTERNATIONAL CORPORATION

(Registrant)

Date:

May ~~5, 2021~~4, 2022

/s/ Russell T. Tiejema

Russell T. Tiejema

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and Principal Accounting Officer)

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PART I		Page
Item 1	Unaudited Financial Statements
	Condensed Consolidated Statements of Income and Comprehensive Income ~~(Loss)~~	1
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Changes in Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to the Condensed Consolidated Financial Statements	5
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	1816
Item 3	Quantitative and Qualitative Disclosures About Market Risk	2726
Item 4	Controls and Procedures	2726
PART II
Item 1	Legal Proceedings	2927
Item 1A	Risk Factors	2927
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	2927
Item 3	Defaults Upon Senior Securities	2927
Item 4	Mine Safety Disclosures	2928
Item 5	Other Information	2928
Item 6	Exhibits	3028


	Three Months Ended
		April 4, 2021		March 29, 2020
Net sales		$	646,337	$	551,228
Cost of goods sold		487,699		416,947
Gross profit		158,638		134,281
Selling, general and administration expenses		83,631		80,333
Restructuring costs		1,643		1,941


Operating income		73,364		52,007
Interest expense, net		11,946		11,282

Other (income) expense, net		(1,343)		49
Income before income tax expense		62,761		40,676
Income tax expense		14,613		9,639
Net income		48,148		31,037
Less: net income attributable to non-controlling interests		1,167		1,152
Net income attributable to Masonite		$	46,981	$	29,885

Basic earnings per common share attributable to Masonite		$	1.92	$	1.20
Diluted earnings per common share attributable to Masonite		$	1.89	$	1.19

Comprehensive income (loss):
Net income		$	48,148	$	31,037
Other comprehensive income (loss):
Foreign currency translation gain (loss)		2,228		(38,687)


Amortization of actuarial net losses		334		173
Income tax expense related to other comprehensive income (loss)		(54)		(89)
Other comprehensive income (loss), net of tax:		2,508		(38,603)
Comprehensive income (loss)		50,656		(7,566)
Less: comprehensive income attributable to non-controlling interests		1,338		573
Comprehensive income (loss) attributable to Masonite		$	49,318	$	(8,139)


ASSETS	April 4, 2021		January 3, 2021
Current assets:
Cash and cash equivalents	$	323,198	$	364,674
Restricted cash	10,560		10,560
Accounts receivable, net	365,396		290,508
Inventories, net	267,230		260,962
Prepaid expenses and other assets	37,497		42,538
Income taxes receivable	5,498		1,124
Total current assets	1,009,379		970,366
Property, plant and equipment, net	616,872		625,126
Operating lease right-of-use assets	152,881		146,806
Investment in equity investees	14,923		14,636
Goodwill	139,728		138,692
Intangible assets, net	165,620		169,392
Deferred income taxes	20,448		25,331
Other assets	50,801		47,411
Total assets	$	2,170,652	$	2,137,760

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	114,259	$	97,211
Accrued expenses	250,058		277,716
Income taxes payable	4,395		11,086
Total current liabilities	368,712		386,013
Long-term debt	791,628		792,242

Long-term operating lease liabilities	140,642		136,235
Deferred income taxes	77,967		73,073
Other liabilities	54,550		55,080
Total liabilities	1,433,499		1,442,643
Commitments and Contingencies (Note 7)	0		0
Equity:
Share capital: unlimited shares authorized, no par value, 24,500,706 and 24,422,934 shares issued and outstanding as of April 4, 2021, and January 3, 2021, respectively	561,776		552,969
Additional paid-in capital	214,689		223,666
Accumulated earnings	59,712		20,385
Accumulated other comprehensive loss	(109,726)		(112,063)
Total equity attributable to Masonite	726,451		684,957
Equity attributable to non-controlling interests	10,702		10,160
Total equity	737,153		695,117
Total liabilities and equity	$	2,170,652	$	2,137,760


	2021 Grants
SAR value (model conclusion)	$	28.08
Risk-free rate	0.8		%
Expected dividend yield	0.0		%
Expected volatility	25.2		%
Expected term (years)	6.0


(In thousands)	December 29, 2019		Severance		Closure Costs		Cash Payments		March 29, 2020
2019 Plan	$	1,535	$	187	$	1,633	$	(2,769)	$	586
2018 Plan	0		103		18		(121)		0
Total	$	1,535	$	290	$	1,651	$	(2,890)	$	586