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    Masonite Corp DCF Analysis Final

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    adi
    Masonite International Corporation conducted discounted cash flow analyses to value the company's equity. Using a perpetuity growth method, they calculated a firm value of $3.4 billion and equity value of $2.8 billion or $49.1 per share. An EBITDA multiple method yielded similar results. Projections estimated growing sales, EBITDA, and free cash flow through 2009. A weighted average cost of capital of 9.34% was used to discount cash flows.

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    Masonite Corp DCF Analysis Final

    Uploaded by

    adi
    246 views5 pages
    Masonite International Corporation conducted discounted cash flow analyses to value the company's equity. Using a perpetuity growth method, they calculated a firm value of $3.4 billion and equity value of $2.8 billion or $49.1 per share. An EBITDA multiple method yielded similar results. Projections estimated growing sales, EBITDA, and free cash flow through 2009. A weighted average cost of capital of 9.34% was used to discount cash flows.

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    Masonite International Corporation conducted discounted cash flow analyses to value the company's equity. Using a perpetuity growth method, they calculated a firm value of $3.4 billion and equity value of $2.8 billion or $49.1 per share. An EBITDA multiple method yielded similar results. Projections estimated growing sales, EBITDA, and free cash flow through 2009. A weighted average cost of capital of 9.34% was used to discount cash flows.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    246 views5 pages

    Masonite Corp DCF Analysis Final

    Uploaded by

    adi
    Masonite International Corporation conducted discounted cash flow analyses to value the company's equity. Using a perpetuity growth method, they calculated a firm value of $3.4 billion and equity value of $2.8 billion or $49.1 per share. An EBITDA multiple method yielded similar results. Projections estimated growing sales, EBITDA, and free cash flow through 2009. A weighted average cost of capital of 9.34% was used to discount cash flows.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 5

    Masonite International Corporation (B):

    Will KKR Slam the Door?

    Team 3
    Group Members:
    1. Adhisya Venkateswaran
    2. Damien Forde
    3. Michael Falatyn
    4. Vidit Shah
    Masonite International Corporation
    USD Millions

    Historical Projected Ann


    Particulars
    2001 2002 2003 2004 2005
    Sales (1) 1,421.6 1,619.5 1,777.2 2,199.9 2,444.1
    % Growth 13.9% 9.7% 23.8% 11.1%

    EBITDA 143.5 209.8 234.9 289.0 332.4


    % Margin 10.1% 13.0% 13.2% 13.1% 13.6%

    EBIT 108.1 164.9 186.3 225.1 261.5


    % Margin 7.6% 10.2% 10.5% 10.2% 10.7%

    Effective Tax Rate 22.4% 22.3% 23.3% 24.0% 23.0%


    Less: Taxes 24.2 36.8 43.4 54.0 60.1
    Tax-effected EBIT 83.9 128.1 142.9 171.1 201.4
    Add: Depreciation & Amortization 35.4 44.9 48.6 63.9 70.9
    Expense
    Less: Capital Expenditures (30.5) (43.5) (49.5) (59.5) (70.0)
    (Increase)/decrease in working capital (23.1) (6.3) (14.7) (76.8) (13.8)
    Unlevered Free Cash Flow 65.7 123.2 127.3 98.7 188.5

    Discount period 1
    WACC 9.34%
    Discount factor 0.915
    Present value of each Unlevered Free Cash Flow 172.4

    Perpetuity Growth Method EBITDA Multiple Method

    Weighted Average Cost Of Capital 9.34% Weighted Average Cost Of Capital


    Net Present Value Of Free Cash Flow $891.9 Net Present Value Of Free Cash Flow

    Terminal Growth Rate 2% Terminal multiple


    Terminal Value $3,879.6 Terminal value
    Present Value Of The Terminal Value $2,483.0 Present value of the terminal value

    Enterprise Value $3,374.9 Enterprise Value


    Less: Net Debt (2) $550.8 Less: Net Debt (1)
    Equity Value $2,824.1 Equity Value

    Shares Outstanding 57.5 Shares Outstanding


    Equity Value Per Share $49.1 Equity Value Per Share

    Notes:
    (1)
    We have taken the Sales figures from Appendix 3. Masonite's Historical and Projected Financials 2005-2009
    (2)
    Net debt represents total debt plus noncontrolling interest plus preferred stock, less cash & short term investments
    DCF Analysis

    Projected Annual Forecast


    2006 2007 2008 2009
    2,544.3 2,709.6 2,902.0 3,119.7
    4.1% 6.5% 7.1% 7.5%

    358.7 395.6 438.2 486.7


    14.1% 14.6% 15.1% 15.6%

    262.1 311.6 345.3 390.0


    10.3% 11.5% 11.9% 12.5%

    23.0% 23.0% 23.0% 23.0%


    60.3 71.7 79.4 89.7
    201.8 239.9 265.9 300.3
    96.7 84.0 92.9 96.7
    (80.0) (90.0) (100.0) (110.0)
    3.5 (1.2) (5.6) (8.0)
    222.0 232.7 253.2 279.0

    2 3 4 5
    9.34% 9.34% 9.34% 9.34%
    0.837 0.765 0.700 0.640
    185.7 178.1 177.2 178.6

    BITDA Multiple Method

    erage Cost Of Capital 9.34%


    Value Of Free Cash Flow $891.9 Current
    TEV / EBITDA
    6.5x 6.9x
    $3,163.6
    e of the terminal value $2,024.8

    $2,916.6
    $550.8
    $2,365.9

    57.5
    $41.1

    ancials 2005-2009
    & short term investments
    Masonite International Corporation WACC Analysis
    USD Millions

    Share Price $32.4 Sources of Funds - Appendix 6


    Total Number of Shares 57.54 Amount Weights Interest
    Outstanding (in Millions)
    $1,175 0.3701 6.01%
    Cost of debt: $350 0.1102 6.01%
    Cost Of Debt (1) 7.83% $300 0.0945 9.51%
    Effective Tax Rate 23% $525 0.1654 9.51%
    After-Tax Cost Of Debt 6.03% $825 0.2598 9.51%
    $3,175 1
    Cost Of Equity:
    Risk Free Rate (2) 4.14% $1,910.0
    Beta (3) 1.15 $1,825.0
    Market Risk Premium 5.50% $85.0
    Cost Of Equity 10.47%

    Percentage Of Capital:
    Total Debt $637.3 25.46%
    Market Value Of Equity $1,865.6 74.54%
    Total Capital $2,502.9 100.00%

    Weighted Average Cost Of 9.34%


    Capital (WACC)

    Notes:
    (1)
    Cost of Debt is calculated as the weighted average rate of 1-year LIBOR + 250bp (refer to Appendix 6)
    (2)
    Average monthly yield for the last 10 years for the 10 year U.S. Government Bond
    (3)
    Beta value assumed to be the levered beta
    f Funds - Appendix 6
    Weighted Average
    Cost of Debt
    2.22%
    0.66%
    0.90%
    1.57%
    2.47%
    7.83%

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