Masonite CFO discusses the industry's climate
Masonite continues to be one of the industry’s leading interior and exterior door designers.
The Tampa, Florida-based manufacturer provides doors and door systems for the new construction and repair, renovation, and remodeling (RRR) sectors. Last year the company saw sales rise 11% to $2.9 billion.
HBSDealer discussed market conditions with Masonite Executive Vice President and Chief Financial Officer Russ Tiejema, who has served in that executive position with the company since 2015.
Here’s what the CFO had to say.
Q: What is Masonite's current feel for the new residential construction and remodeling markets and moving forward into 2024?
A: We came into 2023 planning for a weaker U.S. housing market, with new housing starts potentially down 20% and remodeling activity to be lower by a high-single digit percentage. Through the first quarter, end markets are performing broadly in line with that outlook.
While it’s still too soon to predict, we are cautiously optimistic that by 2024 housing demand will begin to recover. New housing starts improved sequentially each month in the first quarter, and a limited inventory of existing homes for sale could support additional remodeling.
Q: What has Masonite done to combat a slowdown in residential construction?
A: We’re fortunate to have a very experienced team at Masonite that has proven it can adapt to quickly evolving market conditions while executing our long-term growth strategy.
We’ve remained focused on adjusting prices to stay ahead of inflation and promoting a higher-value mix of products that deliver better performance for homeowners and capture more revenue for both Masonite and our distribution channel partners.
Meanwhile, we’re also carefully managing our expenses and optimizing our manufacturing capacity to match demand.
Q: Is one market stronger than the other for Masonite: new single-family homes vs. remodeling/repair?
A: Our business in the North American residential housing market is fairly evenly balanced between new construction, including both single-family and multi-family homes, and the RRR sector. This diversification has enabled us to better weather the volatility that sometimes occurs in the new housing sector.
Q: How does Masonite perceive the current remodeling and repair market?
A: Estimates vary, but experts broadly agree that new construction in the U.S. has lagged behind the need for new housing stock for several years. This has created a situation where existing homes are aging further and, in turn, could benefit from remodeling.
For these reasons, we see both the new construction and renovation markets as having good demand potential in the years ahead, irrespective of near-term demand fluctuations we may experience due to inflation and higher interest rates.
