Masonite makes a miss in Q2

Masonite International Corporation managed to eke out a small 1% sales gain in the second quarter, but it wasn't enough to satisfy economists.

After the company announced its earnings on Thursday, Masonite's stock fell 19.79% by the end of trading.

In total, net sales reached $520 million (compared to $514 million last year), and net income decreased to $27 million (from $33 million in the year-ago period).

A 2% increase in volume contributed to net sales growth, due primarily to new retail business wins and a 2% increase in average unit price.

“The impact of softer than expected demand, foreign exchange, and certain plant consolidations resulted in modest net sales growth in the quarter, while the benefit of improved pricing was offset by approximately $4 million of discrete costs related to legal reserves, the resolution of customer claims in the UK and plant transition costs. Operating and distribution inefficiencies remained a challenge and we continue to take the actions we believe are necessary to improve our manufacturing and distribution performance,” said Fred Lynch, President and CEO.

“In the absence of higher net sales growth in the second half, we would not expect to achieve 2017 Adjusted EBITDA that is meaningfully higher than 2016 given increased wage inflation and operating costs that are expected to continue," added Lynch.

The company also revised its net sales growth rate outlook -- and adjusted EPS -- down.