A proverbial warnings sign was placed over Masonite International (DOOR 56.50, -16.25 -22.3%) shares today after the company last night reported it had missed market expectations for Q2 and warned of further shortfalls for FY17.
In all net sales for the quarter managed only miniscule gains, ending the period at about $519.74 million. Earnings per share (EPS) came in below market expectations as well, as DOOR earned only $0.89 per share.
Management noted, among other things, softer than expected demand as reasoning behind the Q2 shortfall. Other factors hurting results included foreign exchange and certain plant consolidations. The benefit of improved pricing was offset by a $4 million discrete cost related to legal reserves, the resolution of customer claims in the UK and plant transition costs.
Based on results year to date, DOOR no longer expects their net sales growth rate, Adjusted EBITDA and Adjusted EPS to be within the range provided in their original 2017 outlook.
For perspective, the previous FY17 outlook (from February 22) held that FY17 EPS is expected in the range of $4.10-4.60 on adjusted EBITDA of $285-305 million on net sales growth of 7-9%.
Rightfully, investors have some serious qualms with DOOR after the print and guidance. One could easily spout a cliché about how the print may be “closing a door,” or how the guidance “leaves the door open,” but the fact is that at this point, it appears those criticisms may be right up one’s alley as the stock notches year-and-a-half lows today. At best, Q2 serves as a hiccup marred by some near term headwinds but at worst, DOOR may be on a road which leaves little earnings power and lower lows in the stock. Only time will tell.