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 ~~July 4, 2021~~April 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 ~~24,091,364~~22,564,956 shares of Common Stock, no par value, as of ~~August 6, 2021.~~May 2, 2022.

MASONITE INTERNATIONAL CORPORATION

INDEX TO QUARTERLY REPORT ON FORM 10-Q

~~July 4, 2021~~April 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

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

MASONITE INTERNATIONAL CORPORATION

Condensed Consolidated Statements of Income and Comprehensive Income

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

(Unaudited)


		Three Months Ended				Six Months Ended					Three Months Ended
		July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020				April 3, 2022		April 4, 2021
Net sales	Net sales	$	662,410	$	499,658	$	1,308,747	$	1,050,886	Net sales		$	726,217	$	646,337
Cost of goods sold	Cost of goods sold	498,068		363,304		985,767		780,251		Cost of goods sold		541,968		487,699
Gross profit	Gross profit	164,342		136,354		322,980		270,635		Gross profit		184,249		158,638
Selling, general and administration expenses	Selling, general and administration expenses	82,511		73,390		166,142		153,723		Selling, general and administration expenses		83,246		83,631
Restructuring costs		2,192		1,148		3,835		3,089
Asset impairment		10,374		0		10,374		0
Loss on disposal of subsidiaries		8,590		2,091		8,590		2,091
Restructuring (benefit) costs										Restructuring (benefit) costs		(19)		1,643

Operating income	Operating income	60,675		59,725		134,039		111,732		Operating income		101,022		73,364
Interest expense, net	Interest expense, net	11,918		11,824		23,864		23,106		Interest expense, net		10,239		11,946

Other (income) expense, net	Other (income) expense, net	(1,586)		(1,446)		(2,929)		(1,397)		Other (income) expense, net		(1,415)		(1,343)
Income before income tax expense	Income before income tax expense	50,343		49,347		113,104		90,023		Income before income tax expense		92,198		62,761
Income tax expense	Income tax expense	14,246		14,687		28,859		24,326		Income tax expense		23,477		14,613
Net income	Net income	36,097		34,660		84,245		65,697		Net income		68,721		48,148
Less: net income attributable to non-controlling interests	Less: net income attributable to non-controlling interests	1,051		663		2,218		1,815		Less: net income attributable to non-controlling interests		1,139		1,167
Net income attributable to Masonite	Net income attributable to Masonite	$	35,046	$	33,997	$	82,027	$	63,882	Net income attributable to Masonite		$	67,582	$	46,981

Basic earnings per common share attributable to Masonite	Basic earnings per common share attributable to Masonite	$	1.43	$	1.39	$	3.35	$	2.59	Basic earnings per common share attributable to Masonite		$	2.93	$	1.92
Diluted earnings per common share attributable to Masonite	Diluted earnings per common share attributable to Masonite	$	1.41	$	1.38	$	3.30	$	2.56	Diluted earnings per common share attributable to Masonite		$	2.89	$	1.89

Comprehensive income:	Comprehensive income:									Comprehensive income:
Net income	Net income	$	36,097	$	34,660	$	84,245	$	65,697	Net income		$	68,721	$	48,148
Other comprehensive income (loss):
Foreign currency translation gain (loss)		6,039		14,732		8,267		(23,955)
Other comprehensive (loss) income:										Other comprehensive (loss) income:
Foreign currency translation (loss) gain										Foreign currency translation (loss) gain		(2,105)		2,228

Amortization of actuarial net losses	Amortization of actuarial net losses	332		172		666		345		Amortization of actuarial net losses		6		334
Income tax expense related to other comprehensive income (loss)		(59)		(28)		(113)		(117)
Other comprehensive income (loss), net of tax:		6,312		14,876		8,820		(23,727)
Income tax benefit (expense) related to other comprehensive (loss) income										Income tax benefit (expense) related to other comprehensive (loss) income		10		(54)
Other comprehensive (loss) income, net of tax:										Other comprehensive (loss) income, net of tax:		(2,089)		2,508
Comprehensive income	Comprehensive income	42,409		49,536		93,065		41,970		Comprehensive income		66,632		50,656
Less: comprehensive income attributable to non-controlling interests	Less: comprehensive income attributable to non-controlling interests	1,149		893		2,487		1,466		Less: comprehensive income attributable to non-controlling interests		1,281		1,338
Comprehensive income attributable to Masonite	Comprehensive income attributable to Masonite	$	41,260	$	48,643	$	90,578	$	40,504	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	ASSETS	July 4, 2021		January 3, 2021		ASSETS	April 3, 2022		January 2, 2022
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	328,598	$	364,674	Cash and cash equivalents	$	183,526	$	381,395
Restricted cash	Restricted cash	10,560		10,560		Restricted cash	11,098		10,110
Accounts receivable, net	Accounts receivable, net	361,663		290,508		Accounts receivable, net	408,916		343,414
Inventories, net	Inventories, net	281,179		260,962		Inventories, net	405,617		347,476
Prepaid expenses and other assets	Prepaid expenses and other assets	43,198		42,538		Prepaid expenses and other assets	50,734		50,399
Income taxes receivable	Income taxes receivable	3,573		1,124		Income taxes receivable	2,471		1,332
Total current assets	Total current assets	1,028,771		970,366		Total current assets	1,062,362		1,134,126
Property, plant and equipment, net	Property, plant and equipment, net	605,848		625,126		Property, plant and equipment, net	619,803		626,797
Operating lease right-of-use assets	Operating lease right-of-use assets	145,545		146,806		Operating lease right-of-use assets	169,427		176,445
Investment in equity investees	Investment in equity investees	11,475		14,636		Investment in equity investees	16,681		14,994
Goodwill	Goodwill	138,072		138,692		Goodwill	75,402		77,102
Intangible assets, net	Intangible assets, net	160,930		169,392		Intangible assets, net	145,763		150,487
Deferred income taxes	Deferred income taxes	19,040		25,331		Deferred income taxes	21,013		20,764
Other assets	Other assets	47,772		47,411		Other assets	46,677		45,903
Total assets	Total assets	$	2,157,453	$	2,137,760	Total assets	$	2,157,128	$	2,246,618

LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	115,443	$	97,211	Accounts payable	$	134,108	$	138,788
Accrued expenses	Accrued expenses	224,414		277,716		Accrued expenses	226,093		237,300
Income taxes payable	Income taxes payable	4,119		11,086		Income taxes payable	11,982		8,551
Total current liabilities	Total current liabilities	343,976		386,013		Total current liabilities	372,183		384,639
Long-term debt	Long-term debt	791,950		792,242		Long-term debt	866,041		865,721

Long-term operating lease liabilities	Long-term operating lease liabilities	133,924		136,235		Long-term operating lease liabilities	158,859		165,670
Deferred income taxes	Deferred income taxes	78,156		73,073		Deferred income taxes	84,530		77,936
Other liabilities	Other liabilities	59,274		55,080		Other liabilities	49,068		52,874
Total liabilities	Total liabilities	1,407,280		1,442,643		Total liabilities	1,530,681		1,546,840
Commitments and Contingencies (Note 7)	Commitments and Contingencies (Note 7)	0		0		Commitments and Contingencies (Note 7)	0		0
Equity:	Equity:					Equity:
Share capital: unlimited shares authorized, no par value, 24,238,024 and 24,422,934 shares issued and outstanding as of July 4, 2021, and January 3, 2021, respectively		556,398		552,969
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						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	Additional paid-in capital	217,599		223,666		Additional paid-in capital	194,459		222,177
Accumulated earnings		68,845		20,385
(Accumulated deficit) retained earnings						(Accumulated deficit) retained earnings	(2,023)		24,244
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(103,512)		(112,063)		Accumulated other comprehensive loss	(104,810)		(101,582)
Total equity attributable to Masonite	Total equity attributable to Masonite	739,330		684,957		Total equity attributable to Masonite	615,012		688,239
Equity attributable to non-controlling interests	Equity attributable to non-controlling interests	10,843		10,160		Equity attributable to non-controlling interests	11,435		11,539
Total equity	Total equity	750,173		695,117		Total equity	626,447		699,778
Total liabilities and equity	Total liabilities and equity	$	2,157,453	$	2,137,760	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 Six Months Ended
July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020
Total equity, beginning of period $ 737,153 $ 596,256 $ 695,117 $ 636,862
Share capital:
Beginning of period 561,776 551,983 552,969 558,514
Common shares issued for delivery of share based awards 1,133 1,783 11,064 7,273
Common shares issued under employee stock purchase plan 0 0 824 708
Common shares repurchased and retired (6,511) 0 (8,459) (12,729)
End of period 556,398 553,766 556,398 553,766
Additional paid-in capital:
Beginning of period 214,689 212,826 223,666 216,584
Share based compensation expense 4,706 3,740 9,124 7,210
Common shares issued for delivery of share based awards (1,133) (1,783) (11,064) (7,273)
Common shares withheld to cover income taxes payable due to delivery of share based awards (663) (969) (3,944) (2,396)
Common shares issued under employee stock purchase plan 0 0 (183) (311)
End of period 217,599 213,814 217,599 213,814
Accumulated earnings (deficit):
Beginning of period 59,712 (12,203) 20,385 (20,047)
Net income attributable to Masonite 35,046 33,997 82,027 63,882
Common shares repurchased and retired (25,913) 0 (33,567) (22,041)
End of period 68,845 21,794 68,845 21,794
Accumulated other comprehensive loss:
Beginning of period (109,726) (168,193) (112,063) (130,169)
Other comprehensive income (loss) attributable to Masonite, net of tax 6,214 14,646 8,551 (23,378)
End of period (103,512) (153,547) (103,512) (153,547)
Equity attributable to non-controlling interests:
Beginning of period 10,702 11,843 10,160 11,980
Net income attributable to non-controlling interests 1,051 663 2,218 1,815
Other comprehensive income (loss) attributable to non-controlling interests, net of tax 98 230 269 (349)
Dividends to non-controlling interests (1,008) (2,318) (1,804) (3,028)
End of period 10,843 10,418 10,843 10,418
Total equity, end of period $ 750,173 $ 646,245 $ 750,173 $ 646,245
Common shares outstanding:
Beginning of period 24,500,706 24,446,987 24,422,934 24,869,921
Common shares issued for delivery of share based awards 21,030 40,134 175,488 175,045
Common shares issued under employee stock purchase plan 0 0 8,297 9,426
Common shares repurchased and retired (283,712) 0 (368,695) (567,271)
End of period 24,238,024 24,487,121 24,238,024 24,487,121


	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)
Six Months Ended
Cash flows from operating activities: July 4, 2021 June 28, 2020
Net income $ 84,245 $ 65,697
Adjustments to reconcile net income to net cash flow provided by operating activities:
Loss on disposal of subsidiaries 8,590 2,091
Depreciation 35,511 32,861
Amortization 11,326 12,381
Share based compensation expense 9,124 7,210
Deferred income taxes 12,164 6,044
Unrealized foreign exchange gain (372) (78)
Share of income from equity investees, net of tax (1,339) (1,159)
Dividend from equity investee 4,500 2,925
Pension and post-retirement funding, net of expense (1,873) (2,788)
Non-cash accruals and interest 839 852
(Gain) loss on sale of property, plant and equipment (210) 4,045
Asset impairment 10,374 0
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (72,437) (19,304)
Inventories (24,182) (13,519)
Prepaid expenses and other assets (536) (2,860)
Accounts payable and accrued expenses (28,651) (9,491)
Other assets and liabilities (13,863) 18,293
Net cash flow provided by operating activities 33,210 103,200
Cash flows from investing activities:
Additions to property, plant and equipment (29,659) (28,712)
Acquisition of businesses, net of cash acquired (160) 0
Proceeds from sale of subsidiaries, net of cash disposed 7,001 0
Proceeds from sale of property, plant and equipment 3,392 48
Other investing activities (1,247) (1,205)
Net cash flow used in investing activities (20,673) (29,869)
Cash flows from financing activities:
Repayments of long-term debt (945) (57)
Tax withholding on share based awards (3,944) (2,396)
Distributions to non-controlling interests (1,804) (3,028)
Repurchases of common shares (42,026) (34,770)
Net cash flow used in financing activities (48,719) (40,251)
Net foreign currency translation adjustment on cash 106 (2,538)
(Decrease) increase in cash, cash equivalents and restricted cash (36,076) 30,542
Cash, cash equivalents and restricted cash, beginning of period 375,234 177,608
Cash, cash equivalents and restricted cash, at end of period $ 339,158 $ 208,150


	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 58 manufacturing and distribution facilities in 7 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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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, 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. 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 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

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 purchasers are not considered to be a related party.~~ The divestiture of this business resulted in a loss on disposal of subsidiaries of $8.6 million, which was recognized in the second quarter of 2021 in the Europe segment. The total charge consists of $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.

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. The total charge consists of $2.3 million relating to the recognition of 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.

/3. Accounts Receivable

Our customers consist mainly of retailers, distributors and contractors. Our 10 largest customers accounted for ~~58.6%~~60.4% and ~~53.1%~~56.7% of total accounts receivable as of ~~July 4, 2021,~~April 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 ~~July 4, 2021,~~April 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 July 4, 2021.~~2, 2022. The allowance for doubtful accounts balance was ~~$2.9~~$2.0 million and ~~$2.8~~$2.1 million as of ~~July 4, 2021,~~April 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.

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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~~4. Inventories~~

~~The amounts of inventory on hand were as follows as of the dates indicated:~~
(In thousands) July 4, 2021 January 3, 2021
Raw materials $ 209,648 $ 191,784
Finished goods 78,638 75,483
Provision for obsolete or aged inventory (7,107) (6,305)
Inventories, net $ 281,179 $ 260,962

~~5. Accrued Expenses~~

~~The details of our accrued expenses were as follows as of the dates indicated:~~
(In thousands) July 4, 2021 January 3, 2021
Accrued payroll $ 64,354 $ 86,517
Accrued rebates 42,502 49,531
Current portion of operating lease liabilities 23,935 22,667
Accrued interest 16,452 16,435
Accrued legal settlement 9,250 40,000
Other accruals 67,921 62,566
Total accrued expenses $ 224,414 $ 277,716

6. Long-Term Debt


(In thousands)	(In thousands)	July 4, 2021		January 3, 2021		(In thousands)	April 3, 2022		January 2, 2022
3.50% senior unsecured notes due 2030						3.50% senior unsecured notes due 2030	$	375,000	$	375,000
5.375% senior unsecured notes due 2028	5.375% senior unsecured notes due 2028	$	500,000	$	500,000	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	Debt issuance costs	(8,050)		(8,694)		Debt issuance costs	(8,959)		(9,279)

Other long-term debt		0		936

Total long-term debt	Total long-term debt	$	791,950	$	792,242	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 ~~$22.9~~$11.4 million for the three ~~and six~~ months ended ~~July~~April 3, 2022 and April 4, 2021, ~~respectively,~~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 ~~$11.3 million~~August 15 of each year and ~~$22.6 million for~~are due February 15, 2030. The 2030 Notes were issued at par.

Information concerning obligations under the ~~three~~2030 Notes and ~~six months ended June 28, 2020, respectively.~~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 ~~July 4, 2021,~~April 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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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 July 4, 2021, we were in compliance with all covenants under the indenture governing the 2026 Notes.

~~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 were issued in a private placement for resale to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended (the "Securities Act), and to buyers outside of the United States pursuant to Regulation S under the Securities Act. The 2030 Notes bear interest at 3.50% per annum, payable in cash semiannually in arrears on February 15 and August 15 of each year commencing on February 15, 2022, and are due February 15, 2030. The 2030 Notes were issued at par. We received net proceeds of $370.2 million after deducting $4.8 million of debt issuance costs. The debt issuance costs were capitalized as a reduction to the carrying value of debt and are being accreted to interest expense over the term of the 2030 Notes using the effective interest method. The net proceeds from the issuance of the 2030 Notes were used to redeem the remaining $300.0 million aggregate principal amount of the 2026 Notes (as described above), including the payment of related premiums, fees and expenses, with the balance of the proceeds available for general corporate purposes.

Subsequent to the closing of the 2030 Notes offering, the 2026 Notes were redeemed, and the notes were considered extinguished as of July 26, 2021. Under the terms of the indenture governing the 2026 Notes, we paid the applicable premium of $10.8 million. Additionally, the unamortized debt issuance costs of $2.8 million relating to the 2026 Notes were written off in conjunction with the extinguishment of the 2026 Notes. The resulting loss on extinguishment of debt was $13.6 million and will be recorded as part of income from continuing operations before income tax expense in the condensed consolidated statements of comprehensive income in the third quarter of 2021. Additionally, the cash payment of interest accrued to, but not including, the redemption date was accelerated to the redemption date.

Obligations under the 2030 Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis, by certain of our directly or indirectly wholly-owned subsidiaries. We may redeem the 2030 Notes under certain circumstances specified therein.

The indenture governing the 2030 Notes contains limited covenants that, among other things, limit our ability and the ability of our subsidiaries to (i) incur certain secured debt, (ii) engage in certain sale and leaseback transactions and (iii) merge or consolidate with other entities. The foregoing limitations are subject to exceptions as set forth in the indenture governing the 2030 Notes. The indenture governing the 2030 Notes contains customary events of default (subject to certain cases to customary grace and cure periods).

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 ~~July 4, 2021,~~April 3, 2022, we were in compliance with all covenants under the credit agreement governing the ABL Facility. We had availability of ~~$237.0~~$257.7 million under our ABL Facility and there were 0no amounts outstanding as of ~~July 4, 2021.~~April 3, 2022.

7. Commitments and Contingencies

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

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~~7. Commitments and Contingencies~~Indemnifications

The following discussion describes material developments in previously disclosed legal proceedings that occurred since January 3, 2021. 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.

~~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, at a hearing held on June 2, 2021, the Court stated that it would grant final approval of the settlement with the direct purchaser plaintiffs, which it did in a written order issued the next day. Subsequently: (i) we paid $30.75 million in June 2021, representing the remainder of the previously agreed upon settlement that had been accrued for the direct purchaser settlement within accrued expenses in the condensed consolidated balance sheets, and (ii) the Court entered final judgment of dismissal as to defendants in the direct purchaser case. Additionally, at a hearing held on July 26, 2021, the Court stated that it would grant final approval of the settlement with the indirect purchaser plaintiffs, which it did in a written order issued the following day. Subsequently: (i) we paid $9.25 million in August 2021, representing the remainder of the previously agreed upon settlement that had been accrued for the indirect purchaser settlement within accrued expenses in the condensed consolidated balance sheet, and (ii) the Court entered final judgment of dismissal as to defendants in the indirect purchaser case.

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 are conferring regarding a narrowing ofthe issues and with respect to a mutually agreeable timeline 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 requesting that the parties be permitted to provide a further update to the Federal Court by ~~September~~May 30, ~~2021.~~2022. We have not recognized an expense related to damages in connection with this matter because, 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.

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8. Share Based Compensation Plans

Share based compensation expense was $4.7 million and ~~$9.1~~$4.4 million for the three ~~and six~~ months ended ~~July~~April 3, 2022 and April 4, 2021, ~~respectively, and $3.7 million and $7.2 million for the three and six months ended June 28, 2020,~~ respectively. As of ~~July 4, 2021,~~April 3, 2022, the total remaining unrecognized compensation expense related to share based compensation amounted to ~~$25.4~~$31.7 million, which will be amortized over the weighted average remaining requisite service period of ~~1.7~~2.1 years.

Equity Incentive Plans

~~On March 10,~~Our equity incentive plans under the 2021 ~~the Board of Directors adopted the Masonite International Corporation 2021 Omnibus Incentive~~ Equity Plan ~~(the "2021 Plan"), which was approved by~~and 2012 Plan are described in detail and defined in 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 approval.~~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; 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 ~~July 4, 2021,~~April 3, 2022, there were ~~1,490,030~~1,237,928 shares of common stock available for future issuance under the 2021 Equity Plan.

Our equity incentive plans under the 2009 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. Aside from shares issuable for outstanding awards, there are no further shares

Table of ~~common stock available for future issuance under the 2009 and 2012 Plans.~~Contents

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)

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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 ~~July 4, 2021,~~April 3, 2022, the liability and asset relating to deferred compensation had a fair value of ~~$8.4~~$7.9 million and $8.7 million, respectively. As of ~~July 4, 2021,~~April 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 ~~$0.8~~$0.6 million during the ~~six~~three months ended ~~July 4, 2021.~~April 3, 2022.
Six Months Ended July 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 (26,262) 1,869 48.17
Outstanding, end of period 209,539 $ 8,830 $ 70.55 7.6
Exercisable, end of period 124,435 $ 6,128 $ 63.44 6.9

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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

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				2022 Grants
SAR value (model conclusion)	SAR value (model conclusion)	$	28.08		SAR value (model conclusion)	$	26.52
Risk-free rate	Risk-free rate	0.8		%	Risk-free rate	1.9		%
Expected dividend yield	Expected dividend yield	0.0		%	Expected dividend yield	0.0		%
Expected volatility	Expected volatility	25.2		%	Expected volatility	26.5		%
Expected term (years)	Expected term (years)	6.0			Expected term (years)	6.0

Restricted Stock Units

We have granted Restricted Stock Units ("RSUs") to directors and certain employees under the 2012 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.


Six Months Ended July 4, 2021		Total Restricted Stock Units Outstanding	Weighted Average Grant Date Fair Value
Three Months Ended April 3, 2022					Three Months Ended April 3, 2022	Total Restricted Stock Units Outstanding	Weighted Average Grant Date Fair Value
Outstanding, beginning of period	Outstanding, beginning of period	488,057	$	68.15	Outstanding, beginning of period	442,106	$	87.24
Granted	Granted	180,638	109.71		Granted	217,967	88.88
Performance adjustment (1)	Performance adjustment (1)	14,474	63.05		Performance adjustment (1)	25,234	57.19
Delivered	Delivered	(167,732)	65.84		Delivered	(167,632)	75.80
Withheld to cover (2)	Withheld to cover (2)	(31,803)			Withheld to cover (2)	(30,537)
Forfeited	Forfeited	(12,713)	77.91		Forfeited	(5,929)	96.53
Outstanding, end of period	Outstanding, end of period	470,921	$	85.06	Outstanding, end of period	481,209	$	93.48

___________

(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 ~~six~~three months ended ~~July 4, 2021,~~April 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 ~~six~~three months ended ~~July 4, 2021,~~April 3, 2022, is being recognized over the weighted average requisite service period of ~~2.3~~2.4 years. During the ~~six~~three months ended ~~July 4, 2021, 199,535~~April 3, 2022, 198,169 RSUs vested at a fair value of ~~$12.9~~$13.8 million.

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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 and will continue through 2022.~~charges. As of ~~July 4, 2021,~~April 3, 2022, we do not expect to incur ~~up to $1 million of additional~~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 ~~July 4, 2021,~~April 3, 2022, we do not expect to incur ~~up to $1 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 ~~July 4, 2021, we expect to incur up to $1 million of additional 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 and continued throughout 2019. As of July 4, 2021,April 3, 2022, we do not expect to incur any material future charges related to the ~~2018~~2019 Plan.

~~The following tables summarize the restructuring charges recorded for the periods indicated:~~
Three Months Ended July 4, 2021
(In thousands) North American Residential Architectural Corporate & Other Total
2021 Plan $ 0 $ 539 $ 0 $ 539
2020 Plan 19 1,501 0 1,520
2019 Plan 333 (339) 139 133
Total Restructuring Costs $ 352 $ 1,701 $ 139 $ 2,192

Three Months Ended June 28, 2020
(In thousands) North American Residential Architectural Corporate & Other Total
2019 Plan $ 569 $ 86 $ 148 $ 803
2018 Plan 345 0 0 345
Total Restructuring Costs $ 914 $ 86 $ 148 $ 1,148

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(Unaudited)

Six Months Ended July 4, 2021
(In thousands) North American Residential Architectural Corporate & Other Total
2021 Plan $ 0 $ 539 $ 0 $ 539
2020 Plan 19 3,015 0 3,034
2019 Plan (28) 0 290 262
Total Restructuring Costs $ (9) $ 3,554 $ 290 $ 3,835
The following tables summarize the restructuring (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)


		Six Months Ended June 28, 2020											Three Months Ended April 4, 2021
(In thousands)	(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total		(In thousands)	North American Residential		Architectural		Corporate & Other		Total
2020 Plan												2020 Plan	$	—	$	1,514	$	—	$	1,514
2019 Plan	2019 Plan	$	1,297	$	(37)	$	948	$	415	$	2,623	2019 Plan	(361)		339		151		129
2018 Plan		466		0		0		0		466
Total Restructuring Costs	Total Restructuring Costs	$	1,763	$	(37)	$	948	$	415	$	3,089	Total Restructuring Costs	$	(361)	$	1,853	$	151	$	1,643


		Cumulative Amount Incurred Through July 4, 2021											Cumulative Amount Incurred Through April 3, 2022
(In thousands)	(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total		(In thousands)	North American Residential		Europe		Architectural		Corporate & Other		Total
2021 Plan	2021 Plan	$	0	$	0	$	539	$	0	$	539	2021 Plan	$	—	$	—	$	1,680	$	—	$	1,680
2020 Plan	2020 Plan	48		0		4,748		0		4,796		2020 Plan	52		—		5,265		23		5,340
2019 Plan	2019 Plan	9,294		359		1,671		2,357		13,681		2019 Plan	9,059		365		1,671		2,614		13,709
2018 Plan		2,180		2,275		0		0		4,455
Total Restructuring Costs	Total Restructuring Costs	$	11,522	$	2,634	$	6,958	$	2,357	$	23,471	Total Restructuring Costs	$	9,111	$	365	$	8,616	$	2,637	$	20,729

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


(In thousands)	(In thousands)	January 3, 2021		Severance		Closure Costs		Cash Payments		July 4, 2021		(In thousands)	January 2, 2022		Severance		Closure Costs		Cash Payments		April 3, 2022
2021 Plan	2021 Plan	$	0	$	539	$	0	$	(3)	$	536	2021 Plan	$	25	$	(25)	$	39	$	(39)	$	—
2020 Plan	2020 Plan	1,492		260		2,774		(4,472)		54		2020 Plan	22		—		33		(33)		22
2019 Plan	2019 Plan	291		174		88		(388)		165		2019 Plan	2		6		(72)		64		—

Total	Total	$	1,783	$	973	$	2,862	$	(4,863)	$	755	Total	$	49	$	(19)	$	—	$	(8)	$	22


(In thousands)	(In thousands)	December 29, 2019		Severance		Closure Costs		Cash Payments		June 28, 2020		(In thousands)	January 3, 2021		Severance		Closure Costs		Cash Payments		April 4, 2021
2020 Plan												2020 Plan	$	1,492	$	149	$	1,365	$	(2,296)	$	710
2019 Plan	2019 Plan	$	1,535	$	219	$	2,404	$	(3,833)	$	325	2019 Plan	291		85		44		(294)		126
2018 Plan		0		131		335		(466)		0
Total	Total	$	1,535	$	350	$	2,739	$	(4,299)	$	325	Total	$	1,783	$	234	$	1,409	$	(2,590)	$	836

10. ~~Asset Impairment~~

During the three and six months ended July 4, 2021, we recognized asset impairment charges of $10.4 million related to assets in the Architectural segment and an asset in the Corporate & Other category, as a result of announced plant closures under the 2021 and 2020 Plans. This amount was determined based upon the excess of the carrying values of property, plant and equipment over the respective fair values of such assets, determined using a discounted cash flows approach for each asset group. Each of these valuations was performed on a non-recurring basis and is categorized as having Level 3 valuation inputs as established by the FASB's Fair Value Framework. The Level 3 unobservable inputs

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

~~(Unaudited)~~

include an estimate of future cash flows and the salvage value for each of the assets. The fair value of the assets was determined to be $6.3 million, compared to a book value of $16.7 million, with the difference representing the asset impairment charges recorded in the condensed consolidated statements of comprehensive income.

~~11.~~ 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 ~~$0.3 million and $2.3~~$1.1 million of income tax benefit due to the exercise and delivery of ~~share-based~~share based awards during the three ~~and six~~ months ended ~~July 4, 2021, respectively,~~April 3, 2022, compared to ~~$0.1 million and $0.8~~$2.0 million of income tax benefit during the three ~~and six~~ months ended ~~June 28, 2020, respectively.~~April 4, 2021.

~~12.~~

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(Unaudited)

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.

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)	(In thousands, except share and per share information)	Three Months Ended				Six Months Ended				(In thousands, except share and per share information)	Three Months Ended
		July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020				April 3, 2022		April 4, 2021
Net income attributable to Masonite	Net income attributable to Masonite	$	35,046	$	33,997	$	82,027	$	63,882	Net income attributable to Masonite		$	67,582	$	46,981

Shares used in computing basic earnings per share	Shares used in computing basic earnings per share	24,450,542		24,466,575		24,460,098		24,664,008		Shares used in computing basic earnings per share		23,081,474		24,469,653
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Incremental shares issuable under share compensation plans	Incremental shares issuable under share compensation plans	391,477		184,832		423,716		268,856		Incremental shares issuable under share compensation plans		296,880		448,856
Shares used in computing diluted earnings per share	Shares used in computing diluted earnings per share	24,842,019		24,651,407		24,883,814		24,932,864		Shares used in computing diluted earnings per share		23,378,354		24,918,509

Basic earnings per common share attributable to Masonite	Basic earnings per common share attributable to Masonite	$	1.43	$	1.39	$	3.35	$	2.59	Basic earnings per common share attributable to Masonite		$	2.93	$	1.92
Diluted earnings per common share attributable to Masonite	Diluted earnings per common share attributable to Masonite	$	1.41	$	1.38	$	3.30	$	2.56	Diluted earnings per common share attributable to Masonite		$	2.89	$	1.89

Anti-dilutive instruments excluded from diluted earnings per common share	Anti-dilutive instruments excluded from diluted earnings per common share	31,432		461,367		31,432		289,490		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.

~~13.~~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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(Unaudited)

~~measures used by other companies. Adjusted EBITDA should not be considered as an alternative to either net income or~~ operating cash flows determined in accordance with GAAP. Adjusted EBITDA is defined as net income (loss) attributable to Masonite adjusted to exclude the following items:

• depreciation;

• amortization;

• share based compensation expense;

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

• registration and listing fees;

• restructuring ~~costs;~~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 and six months ended June 28, 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 July 4, 2021											Three Months Ended April 3, 2022
(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	$	493,973	$	90,179	$	78,234	$	5,388	$	667,774	Net sales	$	569,429	$	81,839	$	74,659	$	6,196	$	732,123
Intersegment sales	Intersegment sales	(584)		(2,369)		(2,411)		0		(5,364)		Intersegment sales	(865)		(1,371)		(3,670)		—		(5,906)
Net sales to external customers	Net sales to external customers	$	493,389	$	87,810	$	75,823	$	5,388	$	662,410	Net sales to external customers	$	568,564	$	80,468	$	70,989	$	6,196	$	726,217

Adjusted EBITDA	Adjusted EBITDA	$	100,045	$	16,584	$	480	$	(6,545)	$	110,564	Adjusted EBITDA	$	127,667	$	11,843	$	(2,898)	$	(11,860)	$	124,752


		Three Months Ended June 28, 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 sales	Net sales	$	381,608	$	30,430	$	89,396	$	2,966	$	504,400	Net sales	$	477,229	$	90,206	$	78,074	$	6,343	$	651,852
Intersegment sales	Intersegment sales	(443)		(542)		(3,757)		0		(4,742)		Intersegment sales	(765)		(1,667)		(3,083)		—		(5,515)
Net sales to external customers	Net sales to external customers	$	381,165	$	29,888	$	85,639	$	2,966	$	499,658	Net sales to external customers	$	476,464	$	88,539	$	74,991	$	6,343	$	646,337

Adjusted EBITDA	Adjusted EBITDA	$	91,131	$	(918)	$	11,500	$	(9,821)	$	91,892	Adjusted EBITDA	$	94,482	$	16,755	$	1,994	$	(11,206)	$	102,025

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(Unaudited)

Six Months Ended July 4, 2021
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Net sales $ 971,202 $ 180,385 $ 156,308 $ 11,731 $ 1,319,626
Intersegment sales (1,349) (4,036) (5,494) 0 (10,879)
Net sales to external customers $ 969,853 $ 176,349 $ 150,814 $ 11,731 $ 1,308,747
Adjusted EBITDA $ 194,527 $ 33,339 $ 2,474 $ (17,751) $ 212,589

Six Months Ended June 28, 2020
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Net sales $ 766,053 $ 101,586 $ 183,951 $ 8,393 $ 1,059,983
Intersegment sales (1,031) (972) (7,094) 0 (9,097)
Net sales to external customers $ 765,022 $ 100,614 $ 176,857 $ 8,393 $ 1,050,886
Adjusted EBITDA $ 162,827 $ 8,761 $ 22,082 $ (20,261) $ 173,409

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				Six Months Ended					Three Months Ended
(In thousands)	(In thousands)	July 4, 2021		June 28, 2020		July 4, 2021		June 28, 2020		(In thousands)		April 3, 2022		April 4, 2021
Net income attributable to Masonite	Net income attributable to Masonite	$	35,046	$	33,997	$	82,027	$	63,882	Net income attributable to Masonite		$	67,582	$	46,981
Plus:	Plus:									Plus:
Depreciation	Depreciation	17,232		16,843		35,511		32,861		Depreciation		17,272		18,279
Amortization	Amortization	6,408		5,922		11,326		12,381		Amortization		4,612		4,918
Share based compensation expense	Share based compensation expense	4,706		3,740		9,124		7,210		Share based compensation expense		4,719		4,418
Loss (gain) on disposal of property, plant and equipment		387		2,423		(210)		4,045
Restructuring costs		2,192		1,148		3,835		3,089
Asset impairment		10,374		0		10,374		0
Loss on disposal of subsidiaries		8,590		2,091		8,590		2,091
Gain on disposal of property, plant and equipment										Gain on disposal of property, plant and equipment		(2,854)		(597)
Restructuring (benefit) costs										Restructuring (benefit) costs		(19)		1,643

Interest expense, net	Interest expense, net	11,918		11,824		23,864		23,106		Interest expense, net		10,239		11,946

Other (income) expense, net	Other (income) expense, net	(1,586)		(1,446)		(2,929)		(1,397)		Other (income) expense, net		(1,415)		(1,343)
Income tax expense	Income tax expense	14,246		14,687		28,859		24,326		Income tax expense		23,477		14,613

Net income attributable to non-controlling interest	Net income attributable to non-controlling interest	1,051		663		2,218		1,815		Net income attributable to non-controlling interest		1,139		1,167
Adjusted EBITDA	Adjusted EBITDA	$	110,564	$	91,892	$	212,589	$	173,409	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)

~~14. 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 Six Months Ended
(In thousands) July 4, 2021 June 28, 2020 July 4, 2021 June 28, 2020
Accumulated foreign currency translation losses, beginning of period $ (91,613) $ (151,488) $ (93,684) $ (113,336)
Foreign currency translation gain (loss) 2,495 12,478 4,723 (26,209)
Income tax benefit (expense) on foreign currency translation gain (loss) 8 17 22 (27)
Cumulative translation adjustment recognized upon deconsolidation of subsidiary 3,544 2,254 3,544 2,254
Less: foreign currency translation gain (loss) attributable to non-controlling interest 98 230 269 (349)
Accumulated foreign currency translation losses, end of period (85,664) (136,969) (85,664) (136,969)
Accumulated pension and other post-retirement adjustments, beginning of period (18,113) (16,705) (18,379) (16,833)
Amortization of actuarial net losses 332 172 666 345
Income tax expense on amortization of actuarial net losses (67) (45) (135) (90)
Accumulated pension and other post-retirement adjustments (17,848) (16,578) (17,848) (16,578)
Accumulated other comprehensive loss $ (103,512) $ (153,547) $ (103,512) $ (153,547)
Other comprehensive income (loss), net of tax $ 6,312 $ 14,876 $ 8,820 $ (23,727)
Less: other comprehensive income (loss) attributable to non-controlling interest 98 230 269 (349)
Other comprehensive income (loss) attributable to Masonite $ 6,214 $ 14,646 $ 8,551 $ (23,378)

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

Foreign currency translation ~~gains~~losses as a result of translating our foreign assets and liabilities into U.S. dollars during the three months ended ~~July 4, 2021,~~April 3, 2022, were ~~$2.5~~$2.1 million, primarily driven ~~by the strengthening of the Canadian Dollar, partially offset~~ by weakening of the Pound Sterling ~~in comparison to~~and the ~~U.S. Dollar during the period. During the six months ended July 4, 2021, foreign currency translation gains were $4.7 million, primarily driven~~Euro, partially offset by ~~the~~ strengthening of the Canadian Dollar ~~and the Pound Sterling, partially offset by weakening of the Euro~~ in comparison to the U.S. Dollar during the period.

~~Table of Contents~~

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

~~(Unaudited)~~

~~15.~~14. Supplemental Cash Flow Information

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


		Six Months Ended					Three Months Ended
(In thousands)	(In thousands)	July 4, 2021		June 28, 2020		(In thousands)	April 3, 2022		April 4, 2021
Transactions involving cash:	Transactions involving cash:					Transactions involving cash:
Interest paid	Interest paid	$	22,462	$	22,952	Interest paid	$	20,341	$	22,247
Interest received	Interest received	106		852		Interest received	166		25
Income taxes paid	Income taxes paid	26,658		4,101		Income taxes paid	16,735		16,076
Income tax refunds	Income tax refunds	442		469		Income tax refunds	8		438
Cash paid for operating lease liabilities	Cash paid for operating lease liabilities	15,598		14,296		Cash paid for operating lease liabilities	8,372		7,345
Cash paid for finance lease liabilities	Cash paid for finance lease liabilities	653		634		Cash paid for finance lease liabilities	366		327
Non-cash transactions from operating activities:	Non-cash transactions from operating activities:					Non-cash transactions from operating activities:
Right-of-use assets acquired under operating leases	Right-of-use assets acquired under operating leases	6,883		25,425		Right-of-use assets acquired under operating leases	1,434		4,662

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


		July 4, 2021		January 3, 2021			April 3, 2022		January 2, 2022
Cash and cash equivalents	Cash and cash equivalents	$	328,598	$	364,674	Cash and cash equivalents	$	183,526	$	381,395
Restricted cash	Restricted cash	10,560		10,560		Restricted cash	11,098		10,110
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	339,158	$	375,234	Total cash, cash equivalents and restricted cash	$	194,624	$	391,505

Property, plant and equipment additions in accounts payable were ~~$3.5~~$7.2 million and ~~$5.6~~$10.7 million as of ~~July 4, 2021,~~April 3, 2022, and January ~~3, 2021,~~2, 2022, respectively.

~~16.~~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:


		July 4, 2021				January 3, 2021					April 3, 2022				January 2, 2022
(In thousands)	(In thousands)	Fair Value		Carrying Value		Fair Value		Carrying Value		(In thousands)	Fair Value		Carrying Value		Fair Value		Carrying Value
3.50% senior unsecured notes due 2030										3.50% senior unsecured notes due 2030	$	337,841	$	370,728	$	373,238	$	370,593
5.375% senior unsecured notes due 2028	5.375% senior unsecured notes due 2028	$	532,825	$	494,765	$	535,580	$	494,393	5.375% senior unsecured notes due 2028	$	502,080	$	495,313	$	526,730	$	495,128
5.750% senior unsecured notes due 2026		$	311,430	$	297,185	$	315,972	$	296,913

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.

~~17. Subsequent Event~~

On August 9, 2021, the Company’s Board of Directors approved an incremental $210.0 million share repurchase program. The new $210.0 million authorization is in addition to the previously authorized share repurchase of up to $600.0 million stemming from three separate authorizations by our Board of Directors, which as of August 6, 2021, had approximately $40.8 million remaining.

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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 ~~and six~~ months ended ~~July~~April 3, 2022, and April 4, ~~2021, and June 28, 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 58 manufacturing and distribution facilities in 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 ~~six~~three months ended ~~July 4, 2021,~~April 3, 2022, we generated net sales of ~~$969.9~~$568.6 million or ~~74.1%~~78.3%, ~~$176.3~~$80.5 million or ~~13.5%~~11.1% and ~~$150.8~~$71.0 million or ~~11.5%~~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 impacted our business operations and financial results beginning in the second quarter of fiscal year 2020 leading~~which began to ~~an estimated $100 million of lost revenue in the second quarter of 2020, and continues to impact us in fiscal year 2021. Our United Kingdom facilities closed on March 27, 2020, for approximately half~~abate as the quarter and subsequently operated at a reduced capacity for the remainder of the second quarter of 2020. While the pandemic did not have a material adverse effect on our reported results during the second quarter of 2021, the impacts of COVID-19 related absenteeism, laborprogressed. In addition, logistics constraints and supply chain disruptions ~~have continued to result~~further reduced production in ~~lost production at~~some of our facilities and ~~are expected~~impacted our ability to service customers. Rising energy and fuel costs, partly attributable to the war between Russia and Ukraine, along with rising interest rates and global inflation also continue ~~in future periods.~~to impact 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

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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, 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. 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.

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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 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.

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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 ~~will continue~~continued through ~~2022. As of July 4, 2021, we expect to incur up to $1 million of additional charges related to the 2021 Plan. Once fully implemented, the~~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 July 4, 2021, we expect to incur up to $1 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 $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 July 4, 2021, we expect to incur up to $1 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 July 4, 2021, we do not expect to incur any material future charges related to the 2018 Plan.~~expectations.

Inflation

In 2021 and the first ~~half~~quarter of ~~2021,~~2022, we realized higher costs in the wood, resins, metals and packaging product categories as a result of macroeconomic factors as well as increased logistics costs, ~~and wages. Additionally, we continued to recognize higher costs as a result of tight supply chains as well as 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 ~~disruptions~~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.

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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 of this strategy, in the last several years~~On a continual basis, we ~~have pursued~~evaluate and consider strategic acquisitions, ~~targeting companies who produce components for our existing operations, manufacture niche products~~divestitures and ~~provide value-added services. Additionally, we target companies with strong brands, complementary technologies, attractive geographic footprints~~joint ventures to create shareholder value 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.enhance financial performance.

~~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~~

•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 business resulted in a loss on sale of subsidiaries of $8.6 million, which was recognized during the second quarter of 2021 in the Europe segment.

•~~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.~~

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Results of Operations


		Three Months Ended						Six Months Ended							Three Months Ended
(In thousands)	(In thousands)	July 4, 2021			June 28, 2020			July 4, 2021			June 28, 2020			(In thousands)	April 3, 2022			April 4, 2021
Net sales	Net sales	$	662,410		$	499,658		$	1,308,747		$	1,050,886		Net sales	$	726,217		$	646,337
Cost of goods sold	Cost of goods sold	498,068			363,304			985,767			780,251			Cost of goods sold	541,968			487,699
Gross profit	Gross profit	164,342			136,354			322,980			270,635			Gross profit	184,249			158,638
Gross profit as a % of net sales	Gross profit as a % of net sales	24.8		%	27.3		%	24.7		%	25.8		%	Gross profit as a % of net sales	25.4		%	24.5		%
Selling, general and administration expenses	Selling, general and administration expenses	82,511			73,390			166,142			153,723			Selling, general and administration expenses	83,246			83,631
Selling, general and administration expenses as a % of net sales	Selling, general and administration expenses as a % of net sales	12.5		%	14.7		%	12.7		%	14.6		%	Selling, general and administration expenses as a % of net sales	11.5		%	12.9		%
Restructuring costs		2,192			1,148			3,835			3,089
Asset impairment		10,374			—			10,374			—
Loss on disposal of subsidiaries		8,590			2,091			8,590			2,091
Restructuring (benefit) costs														Restructuring (benefit) costs	(19)			1,643

Operating income	Operating income	60,675			59,725			134,039			111,732			Operating income	101,022			73,364
Interest expense, net	Interest expense, net	11,918			11,824			23,864			23,106			Interest expense, net	10,239			11,946

Other (income) expense, net	Other (income) expense, net	(1,586)			(1,446)			(2,929)			(1,397)			Other (income) expense, net	(1,415)			(1,343)
Income before income tax expense	Income before income tax expense	50,343			49,347			113,104			90,023			Income before income tax expense	92,198			62,761
Income tax expense	Income tax expense	14,246			14,687			28,859			24,326			Income tax expense	23,477			14,613
Net income	Net income	36,097			34,660			84,245			65,697			Net income	68,721			48,148
Less: net income attributable to non-controlling interests	Less: net income attributable to non-controlling interests	1,051			663			2,218			1,815			Less: net income attributable to non-controlling interests	1,139			1,167
Net income attributable to Masonite	Net income attributable to Masonite	$	35,046		$	33,997		$	82,027		$	63,882		Net income attributable to Masonite	$	67,582		$	46,981

Three Months Ended ~~July 4, 2021,~~April 3, 2022, Compared with Three Months Ended ~~June 28, 2020~~April 4, 2021

Net Sales

Net sales in the three months ended ~~July 4, 2021,~~April 3, 2022, were ~~$662.4~~$726.2 million, an increase of ~~$162.7~~$79.9 million or ~~32.6%~~12.4% from ~~$499.7~~$646.3 million in the three months ended ~~June 28, 2020. Net~~April 4, 2021. Foreign exchange rate fluctuations negatively impacted net sales in the ~~second~~first quarter of ~~2021 were positively impacted~~2022 by ~~$22.2 million as a result of foreign exchange rate fluctuations.~~$3.0 million. Excluding this exchange rate impact, net sales would have increased by ~~$140.5~~$82.9 million or ~~28.1%~~12.8% due to changes in volume, average unit price, impact of acquisitions and divestitures, and sales of ~~components and other products. Higher~~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") ~~increased~~decreased net sales by ~~$95.3~~$8.9 million or ~~19.1%~~1.4% in the ~~second~~first quarter of ~~2021~~2022 compared to the ~~2020 period. Average unit price increased net sales in the second quarter of~~ 2021 by $34.8 million or 7.0% compared to the 2020 period. Net sales of components and other products to external customers increased $10.7 million or 2.1% in the second quarter of 2021 compared to the 2020 period. Our 2021 divestiture decreased net sales by ~~$0.3~~$6.3 million or ~~0.1%~~1.0% in the three months ended of ~~2021.~~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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~~Net Sales and Percentage of Net Sales by Reportable Segment~~
Three Months Ended July 4, 2021
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Sales $ 493,973 $ 90,179 $ 78,234 $ 5,388 $ 667,774
Intersegment sales (584) (2,369) (2,411) — (5,364)
Net sales to external customers $ 493,389 $ 87,810 $ 75,823 $ 5,388 $ 662,410
Percentage of consolidated external net sales 74.5 % 13.3 % 11.4 %


		Three Months Ended June 28, 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
Sales	Sales	$	381,608		$	30,430		$	89,396		$	2,966	$	504,400	Sales	$	477,229		$	90,206		$	78,074		$	6,343	$	651,852
Intersegment sales	Intersegment sales	(443)			(542)			(3,757)			—		(4,742)		Intersegment sales	(765)			(1,667)			(3,083)			—		(5,515)
Net sales to external customers	Net sales to external customers	$	381,165		$	29,888		$	85,639		$	2,966	$	499,658	Net sales to external customers	$	476,464		$	88,539		$	74,991		$	6,343	$	646,337
Percentage of consolidated external net sales	Percentage of consolidated external net sales	76.3		%	6.0		%	17.1		%					Percentage of consolidated external net sales	73.7		%	13.7		%	11.6		%

North American Residential

Net sales to external customers from facilities in the North American Residential segment in the three months ended ~~July 4, 2021,~~April 3, 2022, were ~~$493.4~~$568.6 million, an increase of ~~$112.2~~$92.1 million or ~~29.4%~~19.3% from ~~$381.2~~$476.5 million in the three months ended ~~June 28, 2020. Net~~April 4, 2021. Foreign exchange rate fluctuations negatively impacted net sales in the ~~second~~first quarter of ~~2021 were positively impacted~~2022 by ~~$11.4 million as a result of foreign exchange rate fluctuations.~~$0.2 million. Excluding this exchange rate impact, net sales would have increased by ~~$100.8~~$92.3 million or ~~26.4%~~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 2022 by $79.5 million or 16.7% compared to the 2021 period. Higher base volume increased net sales in the ~~second~~first quarter of ~~2021~~2022 by ~~$70.9~~$12.4 million or ~~18.6%~~2.6% compared to the ~~2020 period, including our previously announced new retail business win and recovery from prior year COVID-19 impacts. Average unit price increased net sales in the second quarter of~~ 2021 ~~by $25.5 million or 6.7% compared to the 2020~~ period. Net sales of components ~~and other products~~ to external customers were ~~$4.4~~$0.4 million higher in the ~~second~~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 ~~July 4, 2021,~~April 3, 2022, were ~~$87.8~~$80.5 million, ~~an increase~~a decrease of ~~$57.9~~$8.0 million or ~~193.6%~~9.0% from ~~$29.9~~$88.5 million in the three months ended June 28, 2020, primarily due to our United Kingdom and Ireland manufacturing facilities being closed approximately half the quarter and subsequently operating at a reduced capacity for the remainder of the second quarter of 2020 as a result of COVID-19. NetApril 4, 2021. Foreign exchange rate fluctuations negatively impacted net sales in the ~~second~~first quarter of ~~2021 were positively impacted~~2022 by ~~$9.8 million as a result of foreign exchange fluctuations.~~$2.7 million. Excluding this exchange rate impact, net sales would have ~~increased~~decreased by ~~$48.1~~$5.3 million or ~~160.9%~~6.0% due to changes in volume, average unit price, ~~acquisitions and~~ divestitures and sales of ~~components and other products. Higher~~components. Lower base volume ~~increased~~decreased net sales by ~~$40.0~~$13.8 million or ~~133.8%~~15.6% in the ~~second~~first quarter of ~~2021~~2022 compared to the ~~2020~~2021 period ~~primarily~~ due to ~~our manufacturing facilities being temporarily idled~~demand softness driven by weakening consumer confidence in the ~~prior year period as previously noted.~~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 ~~second~~first quarter of ~~2021~~2022 by ~~$6.2~~$14.1 million or ~~20.7%~~15.9% compared to the ~~2020 period as a result of lower comparable prior year net sales due to COVID-19 as previously noted.~~2021 period. Net sales of components ~~and other products~~ to external customers were ~~$2.2~~$0.7 million higher in the ~~second~~first quarter of ~~2021~~2022 compared to the ~~2020~~2021 period. ~~Our 2021 divestiture decreased net sales by $0.3 million or 1.0% in the second quarter of 2021.~~

Architectural

Net sales to external customers from facilities in the Architectural segment in the three months ended ~~July 4, 2021,~~April 3, 2022, were ~~$75.8~~$71.0 million, a decrease of ~~$9.8~~$4.0 million or ~~11.4%~~5.3% from ~~$85.6~~$75.0 million in the three months ended June 28, 2020. Net sales in the second quarter of 2021 were positively impacted by $0.9 million as a result of foreign exchange fluctuations. Excluding this exchange rate impact, net sales would have decreased by $10.7 million or 12.5% due to

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~~changes in volume, average unit price and sales of components and other products.~~April 4, 2021. Lower base volume decreased net sales in the ~~second~~first quarter of ~~2021~~2022 by ~~$13.4~~$7.5 million or ~~15.7%~~10.0% compared to the ~~2020~~2021 period due to ~~lingering 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 ~~$0.4~~$2.9 million lower in the ~~second~~first quarter of ~~2021~~2022 compared to the ~~2020~~2021 period. Average unit price increased net sales in the ~~second~~first quarter of ~~2021~~2022 by ~~$3.1~~$6.4 million or ~~3.6%~~8.5% compared to the ~~2020~~2021 period.

Cost of Goods Sold

Cost of goods sold as a percentage of net sales was ~~75.2%~~74.6% and ~~72.7%~~75.5% for the three months ended ~~July~~April 3, 2022, and April 4, 2021, ~~and June 28, 2020,~~ respectively. ~~Material cost of sales and distribution as a percentage of net sales increased by 2.6% and 1.1%, respectively, compared to the 2020 period. Depreciation, overhead and~~Overhead, direct labor, distribution and depreciation as a percentage of sales decreased by ~~0.5%~~1.3%, ~~0.5%~~0.9%, 0.1% and ~~0.2%~~0.1%, respectively, compared to the ~~second~~first quarter of ~~2020. The increase in material~~2021. Material cost of sales as a percentage of net sales ~~was driven~~increased by ~~commodity inflation and an increase in tariffs and logistics costs, partially offset by higher average unit prices and material cost savings projects. Distribution~~1.5% compared to the 2021 period. Overhead as a percentage of net sales ~~increased~~decreased due to higher ~~logistics~~average unit prices, partially offset by wage inflation, higher factory costs and ~~personnel costs including~~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. ~~Overhead~~Distribution as a percentage of net sales decreased due to higher average unit prices, partially offset by ~~wage inflation,~~ increased ~~plant maintenance~~logistics and ~~increased investment~~personnel costs. The increase in ~~the business as compared to the 2020 period. Direct labor~~material cost of sales as a percentage of net sales ~~decreased due to higher average unit prices, partially offset by manufacturing wage inflation.~~

~~Selling, General and Administration Expenses~~

In the three months ended July 4, 2021, selling, general and administration ("SG&A") expenses, as a percentage of net sales, were 12.5%, as compared to 14.7% in the three months ended June 28, 2020, a decrease of 220 basis points.

~~SG&A expenses in the three months ended July 4, 2021, were $82.5 million, an increase of $9.1 million from $73.4 million in the three months ended June 28, 2020. The overall increase~~ was driven by a $6.3 million increase in personnel costs primarily due to $8.8 million of resource investments to support growth as well as the absence of certain personnel costs in the prior year due to COVID-19, partially offset by a $2.5 million decrease in incentive compensation; unfavorable foreign exchange impacts of $1.9 million; a $1.5 million increase in professional and other fees related to marketing spend as business activities began to return to pre-pandemic levels and a $1.2 million increase in travel expense as a result of COVID-19 related cost reductions taken in the prior year period. These increases were partially offset by a $1.8 million decrease in non-cash items in SG&A expenses, including loss (gain) on disposal of property, plant and equipment, depreciation and amortization, deferred compensation and share based compensation.

~~Restructuring Costs~~

Restructuring costs in the three months ended July 4, 2021, and June 28, 2020, were $2.2 million and $1.1 million, respectively. Restructuring costs in the current year related primarily to the 2021 and 2020 Plans. Restructuring costs in the prior year period related primarily to the 2019 Plan.

~~Asset Impairment~~

Asset impairment charges in the three months ended July 4, 2021, were $10.4 million, and resulted from actions associated with the 2021 and 2020 Plans in our Architectural reporting unit. Refer to Note 10. Asset Impairment, in Item 1 of this Quarterly Report for additional information. There were no asset impairment charges in the three months ended June 28, 2020.

~~Loss on Disposal of Subsidiaries~~

Loss on disposal of subsidiaries in the three months ended July 4, 2021, was $8.6 million, compared to $2.1 million in the three months ended June 28, 2020. The current year loss arose as a result of the sale of our Czech business and is comprised of $5.1 million relating to the write-off of 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 income. The loss in the prior year arose as a result of the liquidation of our legal entity in India and is comprised of the recognition of the cumulative translation adjustment out of accumulated other comprehensive income of $2.3 million and $0.2 million relating to the write-off of net assets and other professional fees.commodity

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

Selling, General and Administration Expenses

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

SG&A expenses in the three months ended April 3, 2022, were $83.2 million, a decrease of $0.4 million from $83.6 million in the three months ended April 4, 2021. The overall decrease was driven by a $3.8 million decrease in non-cash items in SG&A expenses; including loss (gain) on disposal of property, plant and equipment, deferred compensation, depreciation and amortization and share based 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 3, 2022, were minimal, compared to $1.6 million in the three months ended April 4, 2021. Restructuring costs in the prior year period related primarily to the 2020 and 2019 Plans.

Interest Expense, Net

Interest expense, net, in the three months ended ~~July 4, 2021,~~April 3, 2022, was ~~$11.9~~$10.2 million, compared to ~~$11.8~~$11.9 million in the three months ended ~~June 28, 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 ~~July 4, 2021,~~April 3, 2022, was ~~$1.6~~$1.4 million of income, compared to ~~$1.4~~$1.3 million of income in the three months ended ~~June 28, 2020,~~April 4, 2021, remaining relatively flat as compared to the ~~2020~~2021 period.

Income Tax Expense

Income tax expense in the three months ended ~~July 4, 2021,~~April 3, 2022, was ~~$14.2~~$23.5 million, compared to ~~$14.7~~$14.6 million ~~of income tax expense~~ in the three months ended ~~June 28, 2020.~~April 4, 2021. The ~~decrease~~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 discrete items resulting in $3.7 million of income tax expense in the three months ended July 4, 2021, compared to $0.3 million of income tax expense in the three months ended June 28, 2020.

~~Segment Information~~
Three Months Ended July 4, 2021
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Adjusted EBITDA $ 100,045 $ 16,584 $ 480 $ (6,545) $ 110,564
Adjusted EBITDA as a percentage of segment net sales 20.3 % 18.9 % 0.6 % 16.7 %

Three Months Ended June 28, 2020
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Adjusted EBITDA $ 91,131 $ (918) $ 11,500 $ (9,821) $ 91,892
Adjusted EBITDA as a percentage of segment net sales 23.9 % (3.1) % 13.4 % 18.4 %

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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		%

The following reconciles net income (loss) attributable to Masonite to Adjusted EBITDA:
Three Months Ended July 4, 2021
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Net income (loss) attributable to Masonite $ 89,236 $ 1,454 $ (14,626) $ (41,018) $ 35,046
Plus:
Depreciation 9,160 2,506 2,608 2,958 17,232
Amortization 497 4,258 1,147 506 6,408
Share based compensation expense — — — 4,706 4,706
Loss on disposal of property, plant and equipment 36 16 — 335 387
Restructuring costs 352 — 1,701 139 2,192
Asset impairment — — 9,645 729 10,374
Loss on disposal of subsidiaries — 8,590 — — 8,590
Interest expense, net — — — 11,918 11,918
Other (income) expense, net — (240) 5 (1,351) (1,586)
Income tax expense — — — 14,246 14,246
Net income attributable to non-controlling interest 764 — — 287 1,051
Adjusted EBITDA $ 100,045 $ 16,584 $ 480 $ (6,545) $ 110,564


		Three Months Ended June 28, 2020											Three Months Ended April 3, 2022
(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	$	79,841	$	(6,376)	$	4,983	$	(44,451)	$	33,997	Net income (loss) attributable to Masonite	$	117,033	$	5,732	$	(2,826)	$	(52,357)	$	67,582
Plus:	Plus:											Plus:
Depreciation	Depreciation	8,729		2,367		2,777		2,970		16,843		Depreciation	9,964		2,341		2,879		2,088		17,272
Amortization	Amortization	512		3,270		1,750		390		5,922		Amortization	619		3,270		182		541		4,612
Share based compensation expense	Share based compensation expense	—		—		—		3,740		3,740		Share based compensation expense	—		—		—		4,719		4,719
Loss on disposal of property, plant and equipment		506		7		1,904		6		2,423
Restructuring costs		914		—		86		148		1,148
Loss (gain) on disposal of property, plant and equipment												Loss (gain) on disposal of property, plant and equipment	338		(12)		(3,180)		—		(2,854)
Restructuring (benefit) costs												Restructuring (benefit) costs	(91)		6		47		19		(19)

Loss on disposal of subsidiaries		—		—		—		2,091		2,091

Interest expense, net	Interest expense, net	—		—		—		11,824		11,824		Interest expense, net	—		—		—		10,239		10,239

Other (income) expense, net	Other (income) expense, net	—		(186)		—		(1,260)		(1,446)		Other (income) expense, net	(790)		506		—		(1,131)		(1,415)
Income tax expense	Income tax expense	—		—		—		14,687		14,687		Income tax expense	—		—		—		23,477		23,477

Net income attributable to non-controlling interest	Net income attributable to non-controlling interest	629		—		—		34		663		Net income attributable to non-controlling interest	594		—		—		545		1,139
Adjusted EBITDA	Adjusted EBITDA	$	91,131	$	(918)	$	11,500	$	(9,821)	$	91,892	Adjusted EBITDA	$	127,667	$	11,843	$	(2,898)	$	(11,860)	$	124,752

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	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

Adjusted EBITDA in our North American Residential segment ~~increased $8.9 million, or 9.8%, to $100.0~~was $127.7 million in the three months ended ~~July 4, 2021,~~April 3, 2022, an increase of $33.2 million, or 35.1%, from ~~$91.1~~$94.5 million in the three months ended ~~June 28, 2020.~~April 4, 2021. Adjusted EBITDA in the North American Residential segment included corporate allocations of shared costs of ~~$19.3~~$22.5 million and ~~$16.3~~$19.2 million, in the ~~second~~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 $17.5 million, or 1,944.4%, to $16.6~~was $11.8 million in the three months ended ~~July 4, 2021,~~April 3, 2022, a decrease of $4.9 million, or 29.3%, from ~~$0.9~~$16.8 million ~~loss~~ in the three months ended ~~June 28, 2020.~~April 4, 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 ~~second~~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 $11.0 million, or 95.7%, to $0.5~~was a loss of $2.9 million in the three months ended ~~July 4, 2021,~~April 3, 2022, a decrease of $4.9 million, or 245.3%, from ~~$11.5~~$2.0 million of earnings in the three months ended ~~June 28, 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 million, in the second quarter of 2021 and 2020, respectively. The allocations generally consist of certain costs of human resources, legal, finance, information technology, research and development, marketing and share based compensation.

~~Six Months Ended July 4, 2021, Compared with Six Months Ended June 28, 2020~~

~~Net Sales~~

Net sales in the six months ended July 4, 2021, were $1,308.7 million, an increase of $257.8 million or 24.5% from $1,050.9 million in the six months ended June 28, 2020. Net sales in the first six months of 2021 were positively impacted by $33.5 million as a result of foreign exchange rate fluctuations. Excluding this exchange rate impact, net sales would have increased by $224.3 million or 21.3% to changes in volume, average unit price, impact of acquisitions and divestitures and sales of components and other products. Average unit price increased net sales in the first six months of 2021 by $111.1 million or 10.6% compared to the same period in 2020. Higher volumes excluding the incremental impact of acquisitions and divestitures ("base volume") increased net sales by $97.2 million or 9.2% in the first six months of 2021 compared to the same period in 2020. Net sales of components and other products to external customers increased $16.3 million or 1.6% in the first six months of 2021 compared to the same period in 2020. Our 2021 divestiture decreased net sales by $0.3$2.8 million, in the first ~~six months~~quarter of ~~2021.~~

~~Net Sales~~2022 and ~~Percentage of Net Sales by Reportable Segment~~
Six Months Ended July 4, 2021
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Sales $ 971,202 $ 180,385 $ 156,308 $ 11,731 $ 1,319,626
Intersegment sales (1,349) (4,036) (5,494) — (10,879)
Net sales to external customers $ 969,853 $ 176,349 $ 150,814 $ 11,731 $ 1,308,747
Percentage of consolidated external net sales 74.1 % 13.5 % 11.5 %

Six Months Ended June 28, 2020
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Sales $ 766,053 $ 101,586 $ 183,951 $ 8,393 $ 1,059,983
Intersegment sales (1,031) (972) (7,094) — (9,097)
Net sales to external customers $ 765,022 $ 100,614 $ 176,857 $ 8,393 $ 1,050,886
Percentage of consolidated external net sales 72.8 % 9.6 % 16.8 %

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~~North American Residential~~

~~Net sales to external customers from facilities in the North American Residential segment in the six months ended July 4,~~ 2021, were $969.9 million, an increase of $204.9 million or 26.8% from $765.0 million in the six months ended June 28, 2020. Net sales in the first six months of 2021 were positively impacted by $15.8 million as a result of foreign exchange rate fluctuations. Excluding this exchange rate impact, net sales would have increased by $189.1 million or 24.7% due to changes in volume, average unit price and sales of components and other products. Average unit price increased net sales in the first six months of 2021 by $92.5 million or 12.1% compared to the 2020 period. Higher base volume increased net sales by $88.2 million or 11.5% in the first six months of 2021 compared to the same period in 2020 including our previously announced new retail business win and recovery from prior year COVID-19 impacts. Net sales of components and other products to external customers were $8.4 million higher in the first six months of 2021 compared to the same period in 2020.

~~Europe~~

Net sales to external customers from facilities in the Europe segment in the six months ended July 4, 2021, were $176.3 million, an increase of $75.7 million or 75.2% from $100.6 million in the six months ended June 28, 2020, primarily due to our United Kingdom and Ireland manufacturing facilities being closed approximately one fourth of the period and subsequently operating at a reduced capacity once they reopened in May 2020 as a result of COVID-19. Net sales in 2021 were positively impacted by $16.2 million as a result of foreign exchange fluctuations. Excluding this exchange rate impact, net sales would have increased by $59.5 million or 59.1% due to changes in volume, average unit price, acquisitions and divestitures and sales of components and other products. Higher base volume increased net sales in the first six months of 2021 by $44.9 million or 44.6% compared to the same period in 2020, primarily due to our manufacturing facilities being temporarily idled in the prior year period as a result of COVID-19. Average unit price increased net sales in the first six months of 2021 by $11.2 million or 11.1% compared to the same period in 2020. Net sales of components and other products to external customers were $3.7 million higher in the first six months of 2021 compared to the same period in 2020. Our 2021 divestiture decreased net sales by $0.3 million or 0.3% in the first six months of 2021.

~~Architectural~~

Net sales to external customers from facilities in the Architectural segment in the six months ended July 4, 2021, were $150.8 million, a decrease of $26.1 million or 14.8% from $176.9 million in the six months ended June 28, 2020. Net sales in 2021 were positively impacted by $1.4 million as a result of foreign exchange fluctuations. Excluding this exchange rate impact, net sales would have decreased by $27.5 million or 15.5% due to changes in volume, average unit price and sales of components and other products. Lower base volume decreased net sales in the first six months of 2021 by $33.1 million or 18.7% compared to the 2020 period due to lingering weakness in commercial end markets. Net sales of components and other products to external customers were $1.8 million lower in the first six months of 2021 compared to the same period in 2020. Average unit price increased net sales in the first six months of 2021 by $7.4 million or 4.2% compared to the 2020 period.

~~Cost of Goods Sold~~

Cost of goods sold as a percentage of net sales was 75.3% and 74.2% for the six months ended July 4, 2021, and June 28, 2020, respectively. Material cost of sales and distribution as a percentage of net sales increased by 1.3% and 0.9%, respectively, compared to the 2020 period. Depreciation, direct labor and overhead as a percentage of net sales decreased by 0.5%, 0.4% and 0.2%, respectively, compared to the 2020 period. The increase in material cost of sales as a percentage of net sales was driven by commodity inflation and an increase in tariffs and logistics costs, partially offset by higher average unit prices and material cost savings projects. Distribution as a percentage of net sales increased due to higher logistics costs and personnel costs including wage inflation. The decrease in depreciation in the first six months of 2021 was driven by higher average unit prices as compared to the first six months of 2020. Direct labor as a percentage of net sales decreased due to higher average unit prices, partially offset by manufacturing wage inflation. Overhead as a percentage of net sales decreased due to higher average unit prices, partially offset by wage inflation, increased plant maintenance and increased investment in the business as compared to the 2020 period.

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~~Selling, General and Administration Expenses~~

In the six months ended July 4, 2021, selling, general and administration ("SG&A") expenses, as a percentage of net sales, were 12.7% compared to 14.6% the six months ended June 28, 2020, a decrease of 190 basis points.

SG&A expenses in the six months ended July 4, 2021, were $166.1 million, an increase of $12.4 million from $153.7 million in the six months ended June 28, 2020. The overall increase was driven by a $13.1 million increase in personnel costs primarily due to resource investments to support growth as well as the absence of certain personnel costs in the prior year due to COVID-19 and unfavorable foreign exchange impacts of $3.1 million. These increases were partially offset by a $2.2 million decrease in non-cash items including depreciation and amortization, deferred compensation, loss on disposal of property, plant and equipment and share based compensation, a $0.9 million decrease in travel expense and a $0.7 million decrease in professional and other fees as a result of COVID-19 related cost reductions taken in the prior year period.

~~Restructuring Costs~~

Restructuring costs in the six months ended July 4, 2021, were $3.8 million, compared to $3.1 million in the six months ended June 28, 2020. Restructuring costs in the current year related primarily to the 2021 and 2020 Plans. Restructuring costs in the prior year period related primarily to the 2019 Plan.

~~Asset Impairment~~

Asset impairment charges in the six months ended July 4, 2021, were $10.4 million, and resulted from actions associated with the 2021 and 2020 Plans in our Architectural reporting unit. Refer to Note 10. Asset Impairment, in Item 1 of this Quarterly Report for additional information. There were no asset impairment charges in the six months ended June 28, 2020.

~~Loss on Disposal of Subsidiaries~~

Loss on disposal of subsidiaries in the six months ended July 4, 2021, was $8.6 million, compared to $2.1 million in the six months ended June 28, 2020. The current year loss arose as a result of the sale of our Czech business and is comprised of $5.1 million relating to the write-off of 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 income. The loss in the prior year arose as a result of the liquidation of our legal entity in India and is comprised of the recognition of the cumulative translation adjustment out of accumulated other comprehensive income of $2.3 million and $0.2 million relating to the write-off of net assets and other professional fees.

~~Interest Expense, Net~~

Interest expense, net, in the six months ended July 4, 2021, was $23.9 million, compared to $23.1 million in the six months ended June 28, 2020, remaining relatively flat as compared to the 2020 period.

~~Other (Income) Expense, Net~~

Other (income) expense, net, in the six months ended July 4, 2021, was $2.9 million, compared to $1.4 million in the six months ended June 28, 2020. The change in other (income) expense, net is primarily due to a change in the fair value of plan assets in the deferred compensation rabbi trust and 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, partially offset by an increase in pension expense.

~~Income Tax Expense~~

Our income tax expense in the six months ended July 4, 2021, was $28.9 million, compared to $24.3 million of income tax expense in the six months ended June 28, 2020. 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, as well as an increase in discrete income tax expense. We recognized discrete items resulting in income tax expense of $3.2 million the six months ended July 4, 2021, compared to $0.1 million of income tax benefit recorded in the six months ended June 28, 2020. The discrete income tax expense for the period is primarily attributable to (1) an increase in the tax rate applied to

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~~certain deferred tax assets and liabilities in the United Kingdom and (2) the nondeductible loss on disposal of subsidiaries resulting from the sale of the Czech business.~~

~~Segment Information~~
Six Months Ended July 4, 2021
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Adjusted EBITDA $ 194,527 $ 33,339 $ 2,474 $ (17,751) $ 212,589
Adjusted EBITDA as a percentage of segment net sales 20.1 % 18.9 % 1.6 % 16.2 %

Six Months Ended June 28, 2020
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Adjusted EBITDA $ 162,827 $ 8,761 $ 22,082 $ (20,261) $ 173,409
Adjusted EBITDA as a percentage of segment net sales 21.3 % 8.7 % 12.5 % 16.5 %

~~The following reconciles net income (loss) attributable to Masonite to Adjusted EBITDA:~~
Six Months Ended July 4, 2021
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Net income attributable to Masonite $ 173,209 $ 12,862 $ (18,439) $ (85,605) $ 82,027
Plus:
Depreciation 18,671 5,091 5,271 6,478 35,511
Amortization 912 7,143 2,289 982 11,326
Share based compensation expense — — — 9,124 9,124
Loss (gain) on disposal of property, plant and equipment 124 12 149 (495) (210)
Restructuring costs (9) — 3,554 290 3,835
Asset impairment — — 9,645 729 10,374
Loss on disposal of subsidiaries — 8,590 — — 8,590
Interest expense, net — — — 23,864 23,864
Other (income) expense, net — (359) 5 (2,575) (2,929)
Income tax expense — — — 28,859 28,859
Net income attributable to non-controlling interest 1,620 — — 598 2,218
Adjusted EBITDA $ 194,527 $ 33,339 $ 2,474 $ (17,751) $ 212,589

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Six Months Ended June 28, 2020
(In thousands) North American Residential Europe Architectural Corporate & Other Total
Net income (loss) attributable to Masonite $ 138,652 $ (2,893) $ 9,563 $ (81,440) $ 63,882
Plus:
Depreciation 18,093 4,824 5,599 4,345 32,861
Amortization 1,107 6,832 3,672 770 12,381
Share based compensation expense — — — 7,210 7,210
Loss on disposal of property, plant and equipment 1,710 10 2,300 25 4,045
Restructuring costs 1,763 (37) 948 415 3,089
Loss on disposal of subsidiaries — — — 2,091 2,091
Interest expense, net — — — 23,106 23,106
Other expense (income), net — 25 — (1,422) (1,397)
Income tax expense — — — 24,326 24,326
Net income attributable to non-controlling interest 1,502 — — 313 1,815
Adjusted EBITDA $ 162,827 $ 8,761 $ 22,082 $ (20,261) $ 173,409

Adjusted EBITDA in our North American Residential segment increased $31.7 million, or 19.5%, to $194.5 million in the six months ended July 4, 2021, from $162.8 million in the six months ended June 28, 2020. Adjusted EBITDA in the North American Residential segment included corporate allocations of shared costs of $38.5 million and $32.6 million in the first six months of 2021 and 2020, 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 $24.5 million, or 278.4%, to $33.3 million in the six months ended July 4, 2021, from $8.8 million in the six months ended June 28, 2020. Adjusted EBITDA in the Europe segment included corporate allocations of shared costs of $2.0 million and $0.5 million in the first six months of 2021 and 2020. The allocations generally consist of certain costs of human resources, legal, finance and information technology, marketing and share based compensation.

Adjusted EBITDA in our Architectural segment decreased $19.6 million, or 88.7%, to $2.5 million in the six months ended July 4, 2021, from $22.1 million in the six months ended June 28, 2020. Adjusted EBITDA in the Architectural segment also included corporate allocations of shared costs of $5.6 million and $5.4 million in the first six months of 2021 and 2020, 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 anticipate capital expenditures in fiscal year 2021 will be approximately $85 million to $100 million as compared to our original estimate of $80 million to $90 million as previously disclosed under "Key Factors Affecting Our Results of Operations" in our Annual Report on Form 10-K for the year ended January 3, 2021. 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 ~~July 4, 2021,~~April 3, 2022, we had $183.5 million of cash and cash equivalents, availability under our ABL Facility of $257.7 million and availability under our AR Sales Program of $2.2 million.

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~~$328.6 million of cash and cash equivalents, availability under our ABL Facility of $237.0 million and availability under our AR Sales Program of $25.8 million.~~

Cash Flows

Cash ~~provided by~~used in operating activities was ~~$33.2~~$37.8 million during the ~~six~~three months ended ~~July 4, 2021,~~April 3, 2022, compared to ~~$103.2~~$14.3 million ~~of cash provided by operating activities~~ in the ~~six~~three months ended ~~June 28, 2020.~~April 4, 2021. This ~~$70.0~~$23.5 million ~~decrease~~increase in cash ~~provided by~~used in operating activities was due to changes in net working capital, ~~and a $32.2 million decrease in other assets and liabilities,~~ partially offset by a ~~$42.8~~$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 ~~six~~three months of ~~2021~~2022 compared to the same period in ~~2020.~~2021.

Cash used in investing activities was ~~$20.7~~$13.3 million during the ~~six~~three months ended ~~July 4, 2021,~~April 3, 2022, compared to ~~$29.9~~$12.3 million in the ~~six~~three months ended ~~June 28, 2020.~~April 4, 2021. This ~~$9.2~~$1.0 million ~~decrease~~increase in cash used in investing activities was driven by a ~~$7.0~~$5.2 million increase in cash ~~obtained from the sale of subsidiaries in 2021,~~additions to property, plant and equipment, partially offset by a ~~$3.3~~$4.1 million increase in proceeds from the sale of property, plant and equipment ~~partially offset by a $0.9 million increase in cash additions to property, plant and equipment~~ and a ~~$0.2~~$0.1 million ~~increase~~decrease in cash used in acquisitions, net of cash acquired and other investing activities in the first ~~six~~three months of ~~2021~~2022 compared to the same period in ~~2020.~~2021.

Cash used in financing activities was ~~$48.7~~$144.3 million during the ~~six~~three months ended ~~July 4, 2021,~~April 3, 2022, compared to ~~$40.3~~$14.6 million during the ~~six~~three months ended ~~June 28, 2020.~~April 4, 2021. This ~~$8.5~~$129.7 million increase in cash used in financing activities was driven by a ~~$7.3~~$130.4 million increase in cash used for repurchases of common shares and a ~~$1.5~~$0.6 million increase in distributions to non-controlling interests, partially offset by a $1.0 million 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 ~~and a $0.9 million increase in cash used for repayments of long-term debt, partially offset by a $1.2 million decrease in distributions to non-controlling interests~~ in the first ~~six~~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 ~~six~~three months ended ~~July 4, 2021,~~April 3, 2022, we repurchased ~~and retired 368,695~~1,236,330 of our common shares in the open market at an aggregate cost of ~~$42.0~~$140.0 million as part of the share repurchase ~~programs.~~programs and ASR. During the ~~six~~three months ended ~~June 28, 2020,~~April 4, 2021, we repurchased ~~567,271~~84,983 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. The temporary suspension was lifted during the third quarter of 2020.~~$9.6 million. As of ~~July 4, 2021,~~April 3, 2022, there was ~~$58.3~~$256.4 million available for repurchase in accordance with the share repurchase programs. On August 9, 2021, the Company’s Board of Directors approved an incremental $210.0 million share repurchase program. The new $210.0 million authorization is in addition to the previously authorized share repurchase of up to $600.0 million, which as of August 6, 2021, had approximately $40.8 million remaining.

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 ~~July 4, 2021,~~April 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 ~~the event of a loss. Transfers of receivables under this program are accounted for as sales. Proceeds from the transfers~~

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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.

3.50% Senior Notes due 2030

On July 26, 2021, we issued $375.0 million aggregate principal senior unsecured notes (the "2030 Notes"), all of 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 ~~July 4, 2021.~~April 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 ~~July 4, 2021,~~April 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 July 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 July 4, 2021, we were in compliance with all covenants under the indenture governing the 2026 Notes.

~~3.50% Senior Notes due 2030~~

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~~MASONITE INTERNATIONAL CORPORATION~~

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 ~~July 4, 2021,~~April 3, 2022, we were in compliance with all covenants under the credit agreement governing the ABL Facility. We had availability of ~~$237.0~~$257.7 million under our ABL Facility and there were no amounts outstanding as of ~~July 4, 2021.~~April 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 ~~$590.7~~$640.6 million and ~~$1,159.9~~$569.2 million for the three ~~and six~~ months ended ~~July~~April 3, 2022, and April 4, 2021, ~~respectively, and $442.1 million and $934.0 million for the three and six months ended June 28, 2020,~~ respectively. Our non-guarantor subsidiaries generated Adjusted EBITDA of ~~$93.4~~$101.7 million and ~~$170.4~~$77.0 million for the three ~~and six~~ months ended ~~July~~April 3, 2022, and April 4, 2021, ~~respectively, and $76.3 million and $144.7 million for the three and six months ended June 28, 2020,~~ respectively. Our non-guarantor subsidiaries had total assets of ~~$2.2~~$2.3 billion as of ~~July 4, 2021,~~April 3, 2022, and January ~~3, 2021,~~2, 2022, and total liabilities of ~~$922.9~~$962.9 million and ~~$935.3~~$980.6 million as of ~~July 4, 2021,~~April 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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MASONITE INTERNATIONAL CORPORATION

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 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 ~~July 4, 2021,~~April 3, 2022, we repurchased ~~283,712~~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
April 5, 2021, through May 2, 2021 — $ — — $ 90,720,911
May 3, 2021, through May 30, 2021 49,376 120.02 49,376 84,794,993
May 31, 2021, through July 4, 2021 234,336 113.08 234,336 58,297,243
Total 283,712 $ 114.28 283,712


	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

~~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 ~~July 4, 2021, $58.3~~April 3, 2022, $256.4 million was available for repurchase in accordance with the share repurchase programs. On August 9, 2021, the Company’s Board of Directors approved an incremental $210.0 million share repurchase program. The new $210.0 million authorization is in addition to the previously authorized share repurchase of up to $600.0 million, which as of August 6, 2021, had approximately $40.8 million remaining.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. Mine Safety Disclosures

Not applicable.

~~Table of Contents~~

Item 5. Other Information

None.

Item 6. Exhibits

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


Exhibit No.		Description

~~4.1~~3.1		~~Indenture, dated as~~Amended and Restated Articles of ~~July 26, 2021, by and among the Company, the guarantors named therein and Wells Fargo Bank, National Association, as trustee, governing the 3.50% Senior Notes due 2030~~Masonite International Corporation (incorporated by reference to Exhibit ~~4.1~~3.1 to the Company's ~~Current~~Annual Report on Form ~~8-K~~10-K (File No. 001-11796) filed with the Securities and Exchange Commission on ~~July 27, 2021)~~February 26, 2015)
10.1		~~Form~~Confirmation for Fixed Dollar Accelerated Share Repurchase Transaction, dated as of February 28, 2022, by and between Masonite International Corporation ~~2021 Omnibus Incentive Plan~~and Morgan Stanley & Co. LLC (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No. ~~001-11796)~~011-11796) filed with the Securities and Exchange Commission on ~~May 18, 2021)~~
~~10.2(a)~~		Form of Restricted Stock Unit Agreement pursuant to the Masonite International Corporation 2021 Omnibus Incentive Plan for United States Employees (May 2021) (incorporated by reference to Exhibit 10.2(a) to the Company's Current Report on Form 8-K (File No. 001-11796) filed with the Securities and Exchange Commission on May 18, 2021)
~~10.2(b)~~		Form of Performance Restricted Stock Unit Agreement pursuant to the Masonite International Corporation 2021 Omnibus Incentive Plan for United States Employees (May 2021) (incorporated by reference to Exhibit 10.2(b) to the Company's Current Report on Form 8-K (File No. 001-11796) filed with the Securities and Exchange Commission on May 18, 2021)
~~10.2(c)~~		Form of Stock Appreciation Rights Agreement pursuant to the Masonite International Corporation 2021 Omnibus Incentive Plan for United States Employees (May 2021) (incorporated by reference to Exhibit 10.2(c) to the Company's Current Report on Form 8-K (File No. 001-11796) filed with the Securities and Exchange Commission on May 18, 2021)
~~10.2(d)~~		Form of Restricted Stock Unit Agreement pursuant to the Masonite International Corporation 2021 Omnibus Incentive Plan for United States Directors (May 2021) (incorporated by reference to Exhibit 10.2(b) to the Company's Current Report on Form 8-K (File No. 001-11796) filed with the Securities and Exchange Commission on May 18, 2021)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 for the three ~~and six~~ months ended ~~July~~April 3, 2022, and April 4, ~~2021, and June 28, 2020;~~2021; (ii) the Registrant's Condensed Consolidated Balance Sheets as of ~~July 4, 2021,~~April 3, 2022, and January ~~3, 2021;~~2, 2022; (iii) the Registrant's Condensed Consolidated Statements of Changes in Equity for the three ~~and six~~ months ended ~~July~~April 3, 2022, and April 4, ~~2021, and June 28, 2020;~~2021; (iv) the Registrant's Condensed Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~July~~April 3, 2022, and April 4, ~~2021, and June 28, 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.

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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:

~~August 10, 2021~~May 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	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	1916
Item 3	Quantitative and Qualitative Disclosures About Market Risk	3526
Item 4	Controls and Procedures	3526
PART II
Item 1	Legal Proceedings	3627
Item 1A	Risk Factors	3627
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	3627
Item 3	Defaults Upon Senior Securities	3627
Item 4	Mine Safety Disclosures	3628
Item 5	Other Information	3728
Item 6	Exhibits	3728