As of July 3, 2022,2, 2023, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of the shares of voting common stock held by non-affiliates of the registrant, computed by reference to the closing sales price of such shares on the New York Stock Exchange on July 3, 2022,2, 2023, was $1.7$2.2 billion.

Portions of the registrant’s definitive Proxy Statement for its 20232024 Annual General Meeting of Shareholders scheduled to be held on May 11, 2023, to be filed with the Securities and Exchange Commission not later than 120 days after January 1, 2023,("2024 Proxy Statement") are incorporated by reference into Part III, Items 10-14 of this Annual Report on Form 10-K. The 2024 Proxy Statement or an amendment to this Form 10-K ("Form 10-K Amendment") will be filed with the Securities and Exchange Commission not later than 120 days after December 31, 2023.

We are a leading global designer, manufacturer, marketer and distributor of interior and exterior doors and door systemssolutions for the residential and non-residential building construction markets' new construction and repair, renovation and remodeling sectorssectors. Masonite was founded in 1925 in Laurel, Mississippi, by William H. Mason, to utilize vastly available quantities of the residential and non-residential building construction markets.sawmill waste to manufacture a usable product. Since 1925,then, we have provided our customers with innovative products and superior service at compelling values. Today, we

We believe we hold either the number one or two market position in the seven product categories we target in North America: interior molded residential doors; interior stile and rail residential doors; exterior fiberglass residential doors; exterior steel residential doors; interior architectural wood doors; wood veneers; and door core. WeTo serve our customers, we operate 5964 manufacturing and distribution facilities strategically located in seven countries in North America, Europe, South America and Asia, whichAsia.

If the Arrangement Agreement is terminated under certain specified circumstances, we or Owens Corning will be required to pay a termination fee. We will be required to pay Owens Corning a termination fee of $75.0 million under specified circumstances, including (a) termination of the Arrangement Agreement in connection with our entry into an agreement with respect to a Superior Proposal (as defined in the Arrangement Agreement) prior to us receiving stockholder approval of the Acquisition, (b) termination by Owens Corning upon an Adverse Recommendation Change (as defined in the Arrangement Agreement), or (c) termination in certain circumstances by either Owens Corning or us upon failure to obtain Masonite Shareholder Approval (as defined in the Arrangement Agreement) or by Owens Corning if we breach our representations, warranties or covenants in a manner that would result in a failure of an applicable closing condition to be satisfied and, if curable, we fail to cure such breach during specific time periods, in each case, if certain other conditions are strategically locatedmet. Owens Corning will be required to servepay us a reverse termination fee under specified circumstances, including termination of the Arrangement Agreement due to a permanent injunction arising from Competition Laws (as defined in the Arrangement Agreement) when we are not then in material breach of any provision of the Arrangement Agreement and if certain other conditions are met, in an amount equal to $150.0 million. The consummation of the Acquisition remains subject to customary closing conditions, including satisfaction of certain regulatory approvals, approval by our customers.stockholders and other customary closing conditions. The Acquisition is currently expected to close by mid-2024.

The Company has ana vertically integrated business model with three reportable segments: North American Residential, Europe and Architectural.

In the fiscal year ended January 1,December 31, 2023, we sold approximately 3126 million doors to approximately 6,5006,600 customers globally. Our fiscal year 20222023 net sales by segment and estimated global net sales of doors by end market, geographies and products are set forth below:

Our focus on consumer drivenconsumer-driven innovation led us to think broadly about the entire door system and the value it can bring when integrated. We believe that designing differentiated value-added door systems that solve life and living problems can drive growth in any housing cycle. Recognizing human needs for privacy, security, comfort, connectivity, light and style, we provide an extensive product assortment offering good, better, and best options.

FlushOur flush interior doors, are available with either with a hollow or solid core, and are madecrafted by assembling two plywood facings, of plywood, MDF, composite wood or hardboard over a wood or MDF frame. These doors can either have a wood veneer surface suitable for paint or staining or a composite wood surface suitable for paint. Our flush doorsdoor range offers solutions for every preference, from base residential flush doors consistingmade of unfinished composite wood to the ultra high-end exotic wood veneer doors.

As a vertically integrated door manufacturer, we exercise control over every stage of the production process, from initial design and development to the assembly of finished products. Our components plants supply high-quality door facings, door frames and hardware components such as rails, cores and sills to our manufacturing operations. The interior door assembly facilities combine the components to produce a standard hollow or Masonite solid core door. The exterior door facilities assemble steel or fiberglass doors by injecting insulating foam into the facings produced by the component plants. At our door fabrication facilities, final attributes such as painting and framing are added to the door before packaging the doors for delivery.

Our commitment to operational excellence is deeply embedded in our manufacturing process, is designed to deliverensure a reliable supply of high-quality products and outstandingexceptional service. Over the past several years, we have invested in advanced manufacturing technologies to increase quality and shorten lead times. Launched in 2015, we leverage the Mvantage operating system withinThe cornerstone of our manufacturing processes to systemically focus on the elimination of waste and non-value-added activities throughout the organization. In 2022, we continued to progress our deployment of Mvantage throughout the entire enterprise to drive improvements in manufacturing efficiency. Our newest European plant, Stoke-on-Trent, has been optimized to improve material flow and to reduce the need for forklift trucks to enhance safety and reduce emissions and utilizes advanced manufacturing automation to improve production andoperational efficiency product quality and the work experience for our employees. Our

In recent years, our commitment to operational excellence has led us to invest in advanced manufacturing technologies and extend the deployment of the Mvantage operating system across our enterprise. This approach is particularly evident in our European facility in Stoke-on-Trent, where material flow and safety are optimized through advanced manufacturing automation. Similarly, our Fort Mill South Carolina, wasfacility in North America, designed to incorporate all ofwith our best Mvantage practices, as well as incorporateincorporates the latest manufacturing technology to optimize the door manufacturing process.

The assembly process varies by type of door, from a relatively simple process for flush and molded doors, where the door facings are glued to a wood frame, to more complex processes where many pieces of solid and engineered wood are converted to louver or stile and rail doors. Architectural interior doors require another level of customization and sophistication employing the use of solid cores with varying degrees of sound dampening and fire retarding attributes, furniture quality wood veneer facings, as well as secondary machining operations to incorporate more sophisticated commercial hardware, openers and locks. Additionally, architectural doors are typically pre-finished prior to sale.

We focus on making Masonite the brand that customers never substitute.substitute, aligning with their needs for style, comfort, safety and convenience. Our curated product portfolio aligns withreflects our customers'commitment to meeting needs around the home and positions usMasonite for future growth.

Our sales and marketing efforts are concentratedconcentrate on key initiatives designed to build a strong brand preference through creative end-user and channel marketing and a seamless purchasing experience. TheThis targeted approach is driven by our consumer-centric research which uncoveredthat uncovers unmet needs around the home for style, comfort, safety,home. Our commitment involves dedicating more resources to training sales personnel and convenience.influencers, improving the in-store experience and launching a revamped Masonite.com.

In the residential market, we utilize an "All Products" merchandising strategy, which providesproviding our retail and wholesale customers access to our entire product range and the ability to leverage our branding, marketing and selling strategies. We service our big box retail customers directly from our own door fabrication facilities which provide value added services and logistics, including store direct delivery of doors and entry systems and a full complement of in-store merchandising, displays and field service.range. Our residential wholesale sales professionals focus on down channeldown-channel initiatives designed to ensure our products are "pulled" through our North American wholesale distribution network.

Our North American architectural customers are serviced by a dedicated sales and marketing team, providing architects, door and hardware distributors, general contractors and project owners with a wide range of product application advice, technical specifications and applicable compliance and regulatory certifications.

During fiscal year 2022,2023, we sold our products worldwide to approximately 6,5006,600 customers. We have developedInvesting in our channel partners has always been our priority, as we see our strong relationships with thesepartnerships as one of the main reasons we are a market leader today. In early 2023, we implemented a new Go-To-Market strategy in North America focused on unlocking additional value for our customers through our "All Products" cross merchandising strategy. Our vertical integration facilitates our "All Products" strategyand achieving strategic growth objectives. This collaborative approach allowed us to create a shared vision and set of priorities with our door fabrication facilities in particular providing value-added fabricationchannel partners, develop joint business plans and logistical servicespartner with them to deliver best-in-class execution of everyday sales. By achieving further integration and collaboration with our customers, including store delivery of pre-hung interior and exterior doorschannel partners, we can unlock additional opportunities to win the sale with our customers in North America. All of our top 20 customers have purchased doors from us for at least 10 years.end customers.

Although we have a large number ofmany customers worldwide, our largest customer, The Home Depot, accounted for approximately 22%20% of our total net sales in fiscal year 2022.2023. Due to the depth and breadth of the relationship with this customer, which operates in multiple North American geographic regions and which sells a variety of our products, our management believes that this relationship is likely to continue.

The North American door manufacturing industry is highly competitive and includes a number of global and local participants. InThe primary participants in the North American residential interior door industry the primary participants are Masonite and JELD-WEN, which are the only vertically integrated manufacturers of molded door facings. There are also a number ofSeveral smaller competitors in the residential interior door industry includinginclude Steves and Sons Inc. and Lynden Door, Inc., that who primarily source door facings from third partythird-party suppliers. In theThe primary North American residential exterior door industry the primary participants are Masonite, JELD-WEN, Plastpro, Therma-Tru, Feather River and Steves and Sons Inc. InThe primary participants in the North American non-residential building construction door industry the primary participants are Masonite and VT Industries, with the remainder supplied by multiple regional manufacturers. Our primary market in Europe is the United Kingdom. The United Kingdom door industrywhich is similarly competitive includingand includes a number of global and local participants. The primary participants in the United Kingdom are our subsidiary Premdor, JELD-WEN, Vicaima and Distinction Doors. Competition in these markets is primarily based on product quality, design characteristics, brand awareness, serviceability, distribution capabilities and value. We also face competition in the other countries in which we operate.

A significantsizable portion of our net sales are sold to large home centers and other large retailers. The consolidation of our customers and our reliance on fewer larger customers has increased the competitive pressures as some of our largest customers, such as The Home Depot, perform periodic product line reviews to assess their product offerings and suppliers.

Our Company culture is based upon a strong set of values. Our Cultural Pillars define how we act and interact both as individuals and as an organization. They reflect the environment we create where people are empowered, collaborative and focused on doing the right thing for our customers, teammates, shareholders, suppliers and communities in which we work.

Our workforce includes over 10,000 employees and contract personnel located in nineseven different countries. This includes approximately 2,6002,200 unionized employees, approximately 80%85% of whom are located in North America and with the remainder in various foreign locations. Nine of our North American facilities have individual collective bargaining agreements, which are negotiated locally and the terms of which vary by location.

We embrace the diversity of our employees and our customers, including their unique backgrounds, experiences and talents. In 2021, we furthered our progress towards a more equitable and inclusive workforce by formingformed a corporate Diversity Council and five regional Diversity, Equity and Inclusion ("DEI") councils representing Canada, the United States, Chile, Mexico and the United Kingdom/Ireland regions. These councils are comprised of cross-functional individuals and leaders from across their respective regions thatwho represent various diversitya broad cross section of demographics and assist in driving forward DEI initiatives and programming.our implementation of diversity initiatives. In 2022, our diversity strategy was further enhanced with the establishment of employeeby establishing affinity groups that provide employees with a place of belonging, support and allyship for employees.allyship. At Masonite, everyone is valued and appreciated for their unique contributions to the growth and sustainability of our business. We strive to cultivate a culture that supports and enhances our ability to recruit, develop, engage and retain diverse talent at every level. We monitor engagement, in partpartially through a voluntary turnover metric as our goal is to retainmaintain a highly engaged team, thereby reducing voluntary turnover year over year. During fiscal year 2022,2023, our voluntary employee turnover rate for employees in the United States, Canada and the United Kingdom was approximately 21%16%, a reduction of approximately 300500 bps from 2021.2022. These locations collectively make up 83%approximately 85% of our

We believe that safety is as importantvital to our success as productivity and quality. This is reflected in our goal of Target Zero injuries and our continued effort to create an injury-free workplace. We also believe that incidentsIncidents can be prevented through proper management, employee involvement, standardized operations and equipment and attention to detail. Safety programs and training are provided throughout the company to ensure employees and managers have effectivepractical tools to help identify and address both unsafe conditions and at-risk behaviors.

UnderMasonite was founded nearly a century ago on sustainability principles by turning waste wood from a local sawmill in central Mississippi into a useful hardboard product. At the heart of our business philosophy is the continuous pursuit of waste reduction and resource conservation. Our operations deeply integrate the Mvantage lean operating system, rooted in the lean principle of waste elimination. This system equips Masonite employees with essential skills, empowering them to identify and eliminate sources of waste, including defects, over-processing and transportation.

Our unwavering commitment to sustainability approach, we plan to set a carbon reduction target alignedextends to the latest climate scienceproactive management of manufacturing waste. The Mvantage system guides us in actively seeking opportunities to divert waste from landfills by recycling materials back into the end of fiscal year 2024production process or repurposing them for beneficial use as byproducts. We comprehensively assess our manufacturing process, spanning supply sourcing to shipping, to identify ways to conserve natural resources and responsibly source 100% of our wood by 2030. reduce solid waste, wastewater and air emissions. By identifying and eliminating waste, we cultivate a safer, more efficient and more productive operational environment at Masonite.

In 2022, we continued to develop a comprehensive carbon reduction strategy to reduce our Scope 1 and 2 greenhouse gas emissions. This strategy is centered on reducing our reliance on fossil fuels, increasing our renewable energy supply and improving overall operational efficiencies. We releasedestablished a Globalcross-functional committee to develop our responsible wood sourcing program. Our global sourcing team continues to educate our suppliers on our Wood Sourcing Policy that reinforces our commitment to sourcing products and materials responsibly, and outlines expectations of our responsibly sourced wood goal.

We are subject to extensive environmental laws and regulations. The geographic breadth of our facilities subjects us to environmental laws, regulations and guidelines in a number ofseveral jurisdictions, including, among others, the United States, Canada, Mexico, the United Kingdom, the Republic of Ireland, Chile and Malaysia. Such laws, regulations and guidelines relaterelating to, among other things, the discharge of contaminants into water and air and onto land, the storage and handling of certain regulated materials used in the manufacturing process, waste minimization, the disposal of wastes and the remediation of contaminated sites. Many of our products are also subject to various regulations, such as building and construction codes, product safety regulations, health and safety laws and regulations and mandates related to energy efficiency.

We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 available through our website, free of charge, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission.Commission ("SEC"). Our website is www.masonite.com. Information on our website does not constitute part of this Annual Report on Form 10-K.

On February 8, 2024, we entered into the Arrangement Agreement with Owens Corning pursuant to which Owens Corning, through Purchaser, agreed to acquire the Company in an all-cash transaction for $133.00 per share of our issued and Market Risksoutstanding common stock.

Downward trendsThe Arrangement Agreement generally requires us to operate our business in the ordinary course, subject to certain exceptions, including as required by applicable law, pending consummation of the Acquisition, and subjects us to customary interim operating covenants that restrict us, without Owens Corning’s approval (such approval not to be unreasonably conditioned, withheld or delayed), from taking certain specified actions until the Acquisition is completed or the Arrangement Agreement is terminated in accordance with its terms. These restrictions could prevent us from pursuing certain business opportunities that may arise prior to the consummation of the Acquisition and may affect our end marketsability to execute our business strategies and attain financial and other goals and may impact our financial condition, results of operations and cash flows.

The proposed Acquisition could cause disruptions to our business or business relationships with our existing and potential customers, suppliers, vendors, landlords, and other business partners, and this could have an adverse impact on our results of operations. Parties with which we have business relationships may experience uncertainty as to the future of such relationships and may delay or defer certain business decisions, seek alternative relationships with third parties, or seek to negotiate changes or alter their present business relationships with us. Parties with whom we otherwise may have sought to establish business relationships may seek alternative relationships with third parties.

Our business may be adversely impacted by changes in globalhas been sensitive to, and our financial performance is substantially dependent on, the general business and economic conditions in the regions and primary end markets in which we operate. The overall demand for our products could decline as a result of a large number of factors outside of our control, including an economic recession, inflation, deflation, fluctuations in interest rate fluctuations,rates and foreign exchange rate fluctuation,rates, availability and cost of capital, supply chain constraints, consumer spending rates, energy and labor availability and costs and the effects of governmental initiatives to manage economic conditions. Volatility in the financial marketsfiscal and monetary policies in the regions in which we operate and the deterioration of national and globaloperate. Any prolonged economic conditions havedownturn or volatility in the pastfinancial markets that is detrimental to the primary end markets in which we operate could have a material adverse impact on our business, financial performance, results of operations and cash flow.

Trends inThe current macroeconomic conditions of heightened inflation and interest rates have challenged our primary end markets (residential new construction;construction, home repair, renovation and remodeling and non-residential building construction) directly impact our financial performance because they are directly correlated. Challenging economic conditions, either upward or downward, have historically had a direct correlation to the demand for doorsour products and door components.directly impacts our business, financial performance, results of operations and cash flow. Accordingly, the following factors have had and may continue to have a direct impact on our business in the countries and regions in which our products are sold:

Demand forOur business primarily relies on new homeshome construction and home improvement products may be adversely affected by increases in mortgage ratesrepair, renovation and the reduced access to consumer financing. If mortgage rates continue to increase and, consequently, the ability

The building products industry is highly competitive. SomeCompetitive factors we face include price, quality, customer service and on-time and complete deliveries. To the extent any of our principal competitors may have greaterbecome more successful with respect to any of these competitive factors, we could lose customers and our financial marketingcondition and distribution resources than we do and may be less leveraged than we are, providing them with more flexibility to respond to new technology or shifting consumer demand. Accordingly, these competitors may be better able to withstand changes in conditions within the industry in which we operate and may have significantly greater operating and financial flexibility than we do. Also, certainresults of operations could decline. Some of our competitors may have excessaccess to greater financial resources, larger manufacturing capacity and distribution network than we do, which may allow for more operating and financial flexibility to respond to changes within our industry and end markets and product demand by our customers. Also, a substantial increase in the supply of door and door components resulting from increased production capacity which mayby our competitors could lead to pressureus to decrease pricespricing in order to remain competitive, and may limitwhich in turn could adversely impact our ability to raise prices even in markets where economic and market conditions have improved. For these and other reasons, our competitors could take a greater share of sales and cause us to lose business from our customers or hurt our margins.

Our customers consist mainly of wholesalers, retail home centers and contractors. Our top ten customers together accounted for approximately 50% of our net sales in fiscal year 2022,2023, while our largest customer, The Home Depot, accounted for approximately 22%20% of our net sales in fiscal year 2022.during the same period. We expect that a small number of customers will continue to account for a substantial portion of our net sales for the foreseeable future. However, net sales from customersCustomers that have accounted for a significant portion of our net sales in past periods, individually or as a group, may not continue to do so in future periods, or if continued, may not reach or exceed historical net sales levels in any period. For example, many of our largest customers, including The Home Depot, perform periodic line reviews to assess their product offerings, which have, on past occasions, led to loss of business and pricing pressures. 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 most significant customers. Moreover, if any of theseour customers failsfail to remain competitive in thetheir respective markets or encounters financial or operational problems, our net sales and profitability may decline. We generally do not enter into long-term contracts with our customers, and they generally do not have an obligation to purchase products from us. Therefore, we could lose a significant customer with little or no notice. Alternatively, our customers could expect that

InOver the past few years, many of the countries in which we operate, an increasingly large number of building products are sold through large retail home centers and other large retailers. In addition, we have experienced consolidation of distributors in our wholesale distribution channel and among businesses operating in different geographic regions resulting in more customers operating nationally and internationally. If the consolidation of our customers, distributors and distributors weresuppliers have undergone consolidation due to continue, leading to the further increase of their size and purchasing power, it could impact our margin growth and profitability as larger customers may realize certain operational and other benefits of scale. If we fail to provide high levels of service, broad product offerings, competitive prices and timely and complete deliveries, we could lose a substantial amount of our customer base and our profitability, margins and net sales could decrease.being acquired by, or acquiring, another company with similar operations. Consolidation of our customers could also result in the loss of a customer or a substantial portion of a customer's business.their business, in addition to an increased reliance on certain key customers. Future consolidation of our customers or distributors and their increased purchasing power, could result in our customers seeking more favorable terms, including pricing, which may limit our ability to maintain pricing or raise pricing in the future. The consolidation of our suppliers has resulted in limiting, and may further limit, our sources of supply and impact pricing. Any future consolidation of our customers, distributors or suppliers could impact our margin growth, results of operations and cash flow.

Our business is sensitive to consumer and industry trends, demands and preferences. A key element to our continued success is theour ability to maintain accurate forecasting of future demand preferences forimprove our products. Our business in general is subjectexisting products or innovate and develop new product lines to changing consumer andrespond to industry trends, demands and consumer preferences. Our failure to accurately identify and respond to changing consumer trends successfully, could lead to, among other things, rejection of new or existing product lines, increased substitution of our products and price reductions. In addition, we are subject to the risk that new products, proprietary designs and/or changes in manufacturing technologies may reduce demand for or render our products obsolete. In response, we may not be able to manufacture products at prices that would be competitive in the marketplace or have the financial resources to make necessary technology investments, including the use of artificial intelligence (“AI”), or acquire necessary intellectual property rights to develop new products or improve our existing products. Changes to consumer shopping habits and potential trends towards online purchases could also impact our ability to compete as we currently sell our products mainly through our distribution channels. Our continued success depends largely on the introduction and acceptance by our customers of new product lines and improvements to existing product lines that respond to such 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, increased substitution of our products and reduced demand and price reductions for our products, and could materially adversely affect us. In addition, we are subject to the risk that new products or product pricing could be introduced that would replace or reduce demand for our products. Furthermore, new proprietary designs and/or changes in manufacturing technologies may render our products obsolete or we may not be able to manufacture products or designs at prices that would be competitive in the marketplace. We may not have sufficient resources to make necessary investments or we may be unable to make the investments or acquire the intellectual property rights necessary to develop new products or improve our existing products.

We require a regular supply of raw materials, such as wood, wood composites, cut stock, steel, glass, core material, paint, stain and primer as well as petroleum-based products such as binders, resins and frames. In certain instances, we depend on a single or limited number of suppliers for these raw materials.materials and finished goods. We typically do not have long-term contracts with our suppliers. If we are not able to accurately forecast our supply needs, the limited number of suppliersit may make itbe difficult to obtain additional raw materials to respond to shifting or increased demand. Our dependency upon regular deliveries from particular suppliers means that interruptions or stoppages in such deliveries could adversely affect our results of operations until arrangements with alternatealternative suppliers are arranged, if at all, and under terms and pricing that could be made. Furthermore, because our products and the components of some of our products are subject to regulation, suchprohibitive. Additionally, qualifying an alternative suppliers,supplier, even if available, may notrequire a

We analyze climate risks in two separate categories: transition risks and physical risks. Physical risk refers to the risks related to the physical impacts of climate change, driven by severe weather conditions, such as unusually prolonged warm or cold conditions, rain, blizzards, wildfires, flooding or hurricanes. An increase in average global temperatures could result in more frequent and supplysevere weather events that may affect our corporate headquarters, our manufacturing plants or plants owned by customers or suppliers. Additionally, weather events could decrease, if other industries compete with us for such materials. For example, we are highly dependent upon ourdisrupt the supply of inbound raw materials and outbound finished products and could reduce the quality and volume of wood chips used foravailable to our manufacturing plants due to an increase in pest infestation, disease or prolonged drought or flooding. The impact of these types of events on our business may adversely impact our sales, cash flows from operations and results of operations.

Transition risk refers to the productiontransition to a low-carbon economy, which may entail extensive policy, regulatory, legal, technology and market changes. These risks can impact both financial and non-financial risk types and could have broad impacts to our business and operations, such as changes in energy and commodity prices driven by climate-related weather events, prolonged climate-related events that change consumer product preferences and spending, stakeholder perception of our door facingsengagement in climate-related policies and wood composite materials. Failure to obtain significant supply may disrupt our operations and even if we are able to obtain sufficient supply, we may not be able to pass increased supply costs on to our customers in the form of price increases, therebynew regulatory requirements resulting in reduced marginshigher compliance risk and profits.operational costs.

Integrating an acquired business into our current operations is challenging and may take substantial time, effort and resources by management, and there can be no assurances that any acquisition will be successfully integrated into our operations. Additionally, we may become subject to contingent liabilities or legal claims, including environmental, regulatory or compliance issues, tax liabilities that are not adequately covered by insurance or an enforceable indemnity, and we may be volatileresponsible for significant out of pocket expenditures related thereto or otherwise. These liabilities, if they materialize, could have an adverse effect on our business, financial condition, results of operations and are significantly influenced by international, political and economic circumstances, such as the ongoing war between Russia and Ukraine. Fuel prices rose significantly during extended portions of 2022. Although such price increases appearcash flow.

Notwithstanding the above, the material weakness did not result in any material misstatements to the consolidated financial statements. Further, management believes and has concluded that the consolidated financial statements included in this report fairly present, in all material respects, the Company's financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States and other countries, including China, and the impact of anti-dumping and countervailing duties on our business and results of operations.America.

Our financial performance is affected by the availability of qualified personnel and the cost of labor as it impacts our direct labor, overhead, distribution and selling, general and administration costs. Increased costs of wages and benefits and the lack of qualified labor available has had and could continue to have an adverse effect on our results of operations.

We believe many of our direct and indirect suppliers and customers also have unionized workforces. Strikes, work stoppages or slowdowns experienced by our suppliers and customers could result in slowdowns or closures of facilities where components of our products are manufactured or delivered. Any interruption in the production or delivery of these components could reduce sales, increase costs and have a material adverse effect on us.our operations.

We operate facilities worldwide. Someworldwide, some of our facilitieswhich are located in areas that are vulnerable to hurricanes, earthquakes and other natural disasters. In the event that a hurricane, earthquake, natural disaster, fire or other catastrophic event were to interrupt our operations for any extended period of time, it could delay shipment of merchandise to our customers, damage our reputation or otherwise have a material adverse effect on our financial condition and results of operations. Closure of one of our door facing facilities, which are our most capital intensive and least replaceable production facilities, could have a substantial negative effect on our earnings. We maintain insurance coverage to protect us against losses under our property, casualty and umbrella insurance policies, but that coverage may not be adequate to cover all claims that may arise or we may not be able to maintain adequate insurance coverage in the future at an acceptable cost. Any liability not covered by insurance could materially and adversely impact our financial condition and results of operations.

We continually review our manufacturing operations and sourcing capabilities. Effects of periodic manufacturing realignments and cost savings programs have in the past and could in the future result in a decrease in our short-term earnings, including the impacts of restructuring charges and related impairments and other expenses, until the expected cost reductions are achieved. We also cannot assure you we will achieve all of our cost savings. Such programs may include the consolidation, integration and upgrading of facilities, functions, systems and procedures. The success of these efforts will depend in part onto address market conditions and such actions may not be accomplished as quickly as anticipated and the expected cost reductions may not be achieved or sustained.

While we expect these initiatives to result in profit opportunities and savings throughout our competitors in the event theyorganization, our estimated profits and savings are better ablebased on assumptions that may prove to forecast or respond to market demand. Therebe inaccurate, and as a result, there can be no assurance that we will realize profits and cost savings or that, if realized, these profits and cost savings will be ablesustained. Failure to accurately forecast the levelachieve or delays in achieving projected levels of market demandefficiencies and cost savings from such measures, or react in a timely manner to such changes, which may have a material adverse effect on our business, financial conditionunanticipated inefficiencies resulting from in-process or contemplated manufacturing and results of operations.

Our ability to attract, engage and retain talented and qualified employees at all levels within our organization, including production employees, key managers and executives, is critical to the success of our business. We need an engaged workforce to serve our customers and meet our business objectives. Competitive pressures and a tightened labor market within and outside our industry may make it more difficult and expensive to attract and hire qualified employees. Increased turnover of production employees, the retirement of or unforeseen loss of key employees without appropriate succession planning or the ability to develop or hire replacements with the requisite skill could make it difficult to manage our business, meet our business objectives, and hinder the development or enhancement of products and we may experience costsresult in a material adverse effect on our business, financial condition, results of warrantyoperations and cash flows.

Our information technology systems allow us to manufacture doors and door components, accurately maintain books and records, record transactions, provide information to management and prepare our productsconsolidated financial statements. We may not have defectssufficient redundant operations to cover a loss or failure in manufacturea timely manner. Our operations depend on our information technology systems, which may be vulnerable to damage from cyber-attacks, hardware failure, fire, power loss, telecommunications failure, impacts of terrorism, natural disasters (including those related to climate change) or designother disasters. Any damage to our information technology systems could cause interruptions to our operations that materially adversely affect our ability to meet customers’ requirements, resulting in an adverse impact to our business, financial condition and results of operations. We continue to expand, update and upgrade our information technology systems, networks and other core applications, with a focus on optimizing our information technology systems around the globe to meet our changing business demands and to mitigate the risks of a changing cyber security threat landscape. We may not be able to successfully implement certain updates or they do not meet contractual specifications. We estimateupgrades to our future warranty costs based on historical trendsinformation technology systems without experiencing difficulties, which could require significant financial and product sales, but we may failhuman resources and impact our ability to accurately estimate those costsefficiently service our customers or create accurate financial statements resulting in an adverse impact to our business, financial condition and thereby fail to establish adequate warranty reserves for them.results of operations.

Our estimated annual payment obligation for 2023 with respect to our consolidated indebtedness is $60.0 million of interest payments, which gives effect to our increased indebtedness inIn 2023, in connection with our acquisitionacquisitions of Endura. To finance such acquisition,Endura and Fleetwood, we enteredsignificantly increased our outstanding indebtedness by entering into a new five-year $250.0 million delayed-draw term loan facility (the "Term Loan Facility") and an amendment to the ABL Facility increasingto increase the borrowing capacity to $350.0 million. The loans under the Term Loan Facility are repayable in equal quarterly installments for an annual aggregate amortization payment equal to 15% of the aggregate principal amount, with the balance of the principal being due on the term loan maturity date. If we draw funds under the ABL Facility, we incur additional interest expense. Our ability to pay interest on and principal of the senior notes, Term Loan Facility and ABL Facility along with our ability to satisfy our other debt obligations will principally depend upon our future operating performance. As a result, prevailing economic conditionswe expect that our consolidated debt service obligations for 2024 and financial, business and other factors, many of which are beyond our control, will affect our ability to make these payments.increase from prior amounts.

If we do not generate sufficient cash flows from operations to satisfy our consolidated debt service obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our indebtedness, selling assets, reducing or delaying capital investments or seeking to raise additional capital. Our ability to restructure or refinance our debt will depend on the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. In addition, the terms of existing or future debt instruments, including the Term Loan Facility, the ABL Facility and the indentures governing the senior notes, may restrict us from adopting some of these alternatives. If we are unable to generate sufficient cash flows to satisfy our debt service obligations, or to refinance our obligations on commercially reasonable terms, it would have an adverse effect, which could be material, on our business, financial condition and results of operations.

Under such circumstances, we may be unable to comply with the provisions of our debt instruments, including the financial covenants in the Term Loan Facility and the ABL Facility.ABL. If we are unable to satisfy such covenants or other provisions at any future time, we would need to seek an amendment or waiver of such financial covenants or other provisions. The lenders under the Term Loan Facility, and the ABL Facility may not consent to any amendment or waiver requests that we may make in the future, and, if they do consent, they may not do so on terms which are favorableunfavorable to us.

The credit agreements governing the Term Loan Facility and the ABL Facility as well as the indentures governing the senior notes contain, and the terms of any future indebtedness of ours would likely contain, a number of restrictive covenants that impose significant operating and financial restrictions, including restrictions on our ability to engage in acts that may be in our best long-term interests. The indentures governing the senior notes and the credit agreements governing the Term Loan Facility and ABL Facility include covenants that, among other things, restrict our and our subsidiaries’ ability to:

The operating and financial restrictions and covenants in the debt agreements entered into in connection with the Term Loan Facility, the ABL Facility and any future financing agreements may adversely affect our ability to finance future operations or capital needs or to engage in other business activities.

Our financial results may be adversely affected by fluctuating exchange rates. Net sales generated outside of the United States were approximately 26%20% for the year ended January 1,December 31, 2023. In addition, a significant percentage of our costs during the same period were not denominated in U.S. dollars. For example, for most of our non-U.S. manufacturing facilities, the prices for a significant portion of our raw materials are quoted in the domestic currency of the country wherein which the facility is located or otherin currencies that are not U.S. dollars. We also have substantial assets outside the United States. As a result, the volatility in the price of the U.S. dollar has exposed, and in the future may continue to expose, us to currency exchange risks. For example, we are subject to currency exchange rate risk to the extent that some of our costs will be denominated in currencies other than those in which we earn revenues. Also, since our financial statements are denominated in U.S. dollars, changes in currency exchange rates between the U.S. dollar and other currencies have had, and will continue to have, an impact on many aspects of our financial results. Changes in currency exchange rates for any country in which we operate may require us to raise the prices of our products in that country and may result in the loss of business to our competitors that sell their products at lower prices in that country.

Moreover, as our current indebtedness is denominated in a currency that is different from the currencies in which we derive a portion of our net sales, we are also exposed to currency exchange rate risk with respect to those financial obligations. When the outstanding indebtedness is repaid, we may be subject to taxes on any corresponding foreign currency gain.

Borrowings under our current Term Loan Facility and ABL Facility are incurred at variable rates of interest, which exposes us to interest rate fluctuation risk. As described above, interest rates rose significantly in 2022 into the first half of 2023 and such rates may continue to increase in the future.

Potential cyber threats and attacks and data privacy requirements could disrupt our information security systems and cause damageWe provide credit to our business and our reputation.

Concern over global climate change has led to significant federal, state and international regulatory efforts to limit greenhouse gas emissions and increase climate-related reporting and disclosures, which could impose substantial compliance costs. The State of California recently passed the Climate Corporate Data Accountability Act and the Climate-Related Financial Risk Act that will impose broad climate-related disclosure obligations beginning in 2026 on certain companies doing business in California, including us. A similar proposal is under consideration by the SEC. In addition, new laws or future regulations could directly and indirectly affect our customers and suppliers and our business. We cannot predict the SEC issued a proposed rule intended to enhanceeffects on our business that may result from global climate change.

We must comply with these new rules.

Compliance with present or future environmental regulations, such as, for example, future regulations imposed on the use or sale of products containing per- and polyfluoroalkyl substances ("PFAS") or formaldehyde or other foreign jurisdictions. In the year ended January 1, 2023, approximately 74% of our net sales weresimilar classified hazardous chemicals in the United States, 14% in Canada and 9% in the United Kingdom. Further, certain of our businesses obtain raw materials and finished goods from foreign suppliers. Accordingly, our business is subject to political, economic and other risks that are inherent in operating in numerous countries.

We operate facilities in seven countries and sell our products around the world. As a result of these international operations, we may enter into, from time to time, into negotiations and contractual arrangements with parties

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act, the Dodd-Frank Act and related regulations implemented by the Securities and Exchange Commission ("SEC"),SEC, and the stock exchanges are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time-consuming. Further, new regulations or interpretations of existing laws may result in enhanced disclosure obligations, including with respect to climate change or other Environmental, Social and Governance matters, which could negatively affect us or materially increase our regulatory burden. Increased regulations generally increase our costs, and we could continue to experience higher costs if new laws require us to spend more time, hire additional personnel or purchase new technology to comply effectively. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

We intend to invest in technologies and resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed. We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer

We rely on a combination of United States, Canadian and, to a lesser extent, European patent, trademark, copyright and trade secret laws as well as licenses, nondisclosure, confidentiality agreements and other contractual

Our ability to protect our intellectual property, including our patents, trademarks, copyrights, trade secrets and licensed intellectual property, from unauthorized use by others is critical to our success. There is no guarantee that the patents and trademarks we have obtained, or other protections such as confidentiality, trade secrets, copyrights and copyrights,confidentiality agreements with our employees and third parties, will be adequate to prevent imitation of our products by others. Our ability to compete based on our advantageous intellectual property may be harmed if we are unable to protect our products through enforcing or prosecuting our intellectual property rights. These measures may not be adequate to protect our intellectual property from unauthorized disclosure, third-party infringement or misappropriation and is further complicated by recent enacted state laws limiting or banning the use of employee non-competes by employers, as well as proposed rulemaking at the federal level to ban such agreements. If we fail to protect our intellectual property from unauthorized use, we risk the loss of these rights and any associated competitive advantage.

Moreover, we may be accused of misappropriating or infringing on third-party intellectual property. Our trademarks and branding practices could also be challenged. In the event of a challenge, we may be required to defend the Company in litigation, or we may be required to institute litigation to enforce such intellectual property rights from

Our intellectual property rights may be subject to various attacks claiming such rights are valid or unenforceable. These attacks might invalidate, render unenforceable or otherwise limit the scope of the protection that our patents and trademarks afford. In the event we lose the use of a product name, our efforts building such brand would be lost and we would have to devote management resources to rebuilding a brand for such product, which we may do to varying degrees of success. Even if we do prevail in a patent infringement litigation, third parties may still be able to design around our patents, which could harm our competitive position.

Our continued success depends on our ability to develop and introduce new or improved products, to improve our manufacturing and product service processes and to protect our rights to the technologies used in our products. If we fail to do so, or if existing or future competitors achieve greater success than we do in these areas, our results of operations and our profitability may decline.

We depend on our door and door component manufacturing intellectual property and products to generate revenue. Some of our patents will begin to expire in the next several years. While we will continue to work to add to our patent portfolio to protect the intellectual property of our products, we believe it is possible that new competitors will emerge in door and door component manufacturing. We do not know whether we will be able to develop additional proprietary designs, processes or products. If any protection we obtain is reduced or eliminated, others could use our intellectual property without compensating us, resulting in financial harm to our business. Moreover, as our patents expire, competitors may utilize the information found in such patents to commercialize their own products. While we seek to offset the losses relating to important expiring patents by securing additional patents on commercially desirable

Further, we face the risk that third parties will succeed in developing or marketing products that would render our products obsolete or noncompetitive. New, less expensive methods could be developed that replace or reduce the demand for our products or may cause our customers to delay or defer purchasing our products. Accordingly, our success depends in part upon our ability to respond quickly to market changes through the development and introduction of new products. The relative speed with which we can develop products, complete regulatory clearance or approval processes and supply commercial quantities of the products to the market are important to remain competitive. Any delays could result in a loss of market acceptance and market share. We cannot provide assuranceassurances that our new product development efforts will result in any commercially successful products.

None.

Our United States executive headquarters are located in Tampa, Florida, and consist of approximately 88,000 square feet of leased office space at two sites. Our Canadian executive offices are located in a single leased site in Concord, Ontario. As of January 1,December 31, 2023, we owned and leased the following number of properties, by reportable segment:

Our properties in the North American Residential and Architectural segments are distributed across 2829 states in the United States and four provinces in Canada, as well as two manufacturing facilities in Mexico and three manufacturing facilities in Chile. Our properties in the Europe segment are distributed across the United Kingdom, as well as one manufacturing facility in Ireland. Our material properties in the Corporate and Other category include one manufacturing facility in Malaysia and four support facilities in the United States. As of January 1,December 31, 2023, total floor space at our manufacturing facilities was 12.413.8 million square feet, including 3.2 million square feet in our five molded door facings facilities. In addition to the properties outlined above, we lease one idle manufacturing facility in the United States and own 17,000 acres of forestland in Costa Rica.

We believe that our facilities are suitable to our respective businesses and have production capacity adequate to support our current level of production to meet our customers’ demand. Additional investments in manufacturing facilities are made as appropriate to balance our capacity with our customers’ demand.

The information required with respect to this item can be found under "Commitments and Contingencies" in Note 10 to the consolidated financial statements in this Annual Report and is incorporated by reference into this Item 3.

Not applicable.

Information about the Company's executive officers is incorporated herein by reference from Part III, Item 10 hereof.

Our common shares are listed on the New York Stock Exchange ("NYSE") under the symbol "DOOR"."DOOR."

As of February 28, 2023,27, 2024, we had one record holder of our common shares, Cede & Co., the nominee of the Depository Trust Corporation.

We do not intend to pay any cash dividends on our common shares for the foreseeable future and instead may retain earnings, if any, for future operations and expansion, share repurchases or debt repayments, among other things. Any decision to declare and pay dividends in the future will be made at the discretion of our Board of Directors and will depend on, among other things, our results of operations, liquidity requirements, financial condition, contractual restrictions and other factors that our Board of Directors may deem relevant. In addition, our ability to pay dividends is limited by covenants in our Term Loan Facility, in our ABL Facility and in the indenture governing our senior notes. Future agreements may also limit our ability to pay dividends. See Note 9 to our audited consolidated financial statements contained elsewhere in this Annual Report for restrictions on our ability to pay dividends.

The following graph depicts the total return to shareholders from January 1, 2018,2019, through January 1,December 31, 2023, relative to the performance of the Standard & Poor's 500 Index and the Standard & Poor's 1500 Building Products Index. The graph assumes an investment of $100 in our common stock and each index on January 1, 2018,2019, and the reinvestment of dividends paid since that date. The stock performance shown in the graph is not necessarily indicative of future price performance.

None.

During the three months ended January 1,December 31, 2023, we repurchased 123,91183,528 of our common shares in the open market.

The Company's Board of Directors has approved five share repurchase authorizations, the most recent being an incremental $200.0 million share repurchase program approved on February 21, 2022. Under this program, the Company may repurchase shares from time to time. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions and alternate uses of capital. The share repurchase programs have no specified end date and the timing and amount of any share repurchases willprogram may be determined by management based on our evaluation ofeffected through Rule 10b5-1 plans, open market conditions and other factors. Any repurchasespurchases, each in compliance with Rule 10b-18 under the share repurchase programs may be made in the open market, inExchange Act, or through privately negotiated transactions or otherwise, subject to market conditions, applicable legal requirements and other relevant factors.transactions. The share repurchase programs do not obligate us to acquire any particular amount of common shares, and theyprogram may be suspended or terminateddiscontinued at any time atand does not have an expiration date. The Arrangement Agreement with Owens Corning restricts our discretion. Repurchases under theability to repurchase our shares and therefore our share repurchase programs are permitted to be made under one or more Rule 10b5-1 plans, which would permitprogram is currently suspended through February 8, 2025, other than for the repurchase of shares to be repurchased when we might otherwise be precluded from doing so under applicable insider trading laws.associated with tax withholding requirements for share-based compensation.

DuringThe Company entered into an accelerated share repurchase ("ASR") transaction during the first quarter of 2022 the Company entered into an ASR transaction 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 final delivery of 319,678 common shares were deliveredoccurred in the second quarter. The $100.0 million ASR transaction was therefore completed in the second quarter of 2022 with a total delivery of 1,167,765 common shares at a volume-weighted average price ("VWAP") per share minus an agreed upon discount totaling $85.63 per share. The cash paid was reflected as a reduction of equity at the initial delivery of shares and the number of common shares outstanding were reduced at the dates of physical delivery.

As of January 1,December 31, 2023, since inception of the repurchase programs we have repurchased $763.1$809.7 million of our common shares and have $246.9$200.3 million available for repurchase in accordance with our share repurchase programs.

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 an extensive range of interior and exterior doors in a wide array of designs, materials and sizes. Our interior doors are made with wood and related materials such as hardboard (including wood composite molded and flat door facings). Our exterior doors are made primarily of steel, fiberglass or composite materials. Our residential doors are molded panel, flush, stile and rail, steel or fiberglass.

We operate 5964 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 currently organized and managed principally by end market: North American Residential, Europe and Architectural. In the year ended January 1,December 31, 2023, we generated net sales of $2,283.6$2,244.9 million or 79.0%79.3%, $280.8$247.0 million or 9.7%8.7% and $307.0$323.4 million or 10.6%11.4% in our North American Residential, Europe and Architectural segments, respectively. See "Segment Information" below for a description of our reportable segments.

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 global economic conditions, including inflation, deflation, interest rates, availability of capital, supply chain constraints, 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 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 and 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.

Our customers consist mainly of wholesalers and retail home centers. In fiscal year 2022,2023, our top ten customers together accounted for approximately 50% of our net sales and our top customer, The Home Depot, Inc. accounted for approximately 22%20% of our net sales in fiscal year 2022.2023. 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.

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

In December 2022, we began implementing a plan to improve overall business performance that includes the optimization of our manufacturing capacity and reduction of our overhead and selling, general and administration workforce primarily in our North American Residential reportable segment as well as actions in the Architectural reportable segment and in our head offices (collectively, the "2022 Plan"). The optimization of our manufacturing capacity involves specific plants in the North American Residential segment and costs associated with the closure of these plants and related headcount reductions. Costs associated with the 2022 Plan include severance and closure charges

In May 2021, we initiated further actions to improve overall business performance including the reorganization of our specialty door manufacturing capacity in our Architectural reportable segment. The reorganization of our manufacturing capacity involves specific facilities in the Architectural segment and costs associated with the reorganization of these facilities, which 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 continued through 2021. The actions taken as part of the 2021 Plan are substantially complete and the annual earnings and cash flow savings realized were materially in line with expectations.

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 continued through 2021. The actions taken as part of the 2020 Plan are substantially complete and the annual earnings and cash flow savings realized were materially in line with expectations.

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 continued through 2021. Additionally, the plan to divest non-core assets was determined to be a triggering event requiring a test of the carrying value of the definite-lived assets relating to the divestitures, as further described in Note 14. In the fourth quarter of 2019, we initiated additional restructuring actions related to both manufacturing capacity and reduction of our overhead and selling, general and administration workforce. The actions taken as part of the 2019 Plan are substantially complete and the annual earnings and cash flow savings realized were materially in line with expectations.

We are pursuing a strategic initiative of optimizing our global business portfolio. On a continual basis, we evaluate and consider strategic acquisitions, divestitures and joint ventures to create shareholder value and enhance financial performance.

Net sales in the year ended January 1,December 31, 2023, were $2,891.7$2,830.7 million, an increasea decrease of $294.8$61.0 million or 11.4%2.1% from $2,596.9$2,891.7 million in the year ended January 2, 2022. Net1, 2023. Foreign exchange rate fluctuations negatively impacted net sales in 2022 were negatively impactedthe year ended December 31, 2023 by $46.8$9.7 million. The 2023 acquisitions increased net sales by $248.1 million as a result of foreignor 8.6%. Excluding the exchange rate fluctuations. Excluding this exchange rate impact and our 2023 acquisitions, net sales would have increaseddecreased by $341.6$299.4 million or 13.2%10.4% due to changes in volume, average unit price impact of divestitures and sales of components. Average unit price in 2022 increased net sales by $464.7 million or 17.9% compared to 2021. Lower volumes excluding the incremental impact of acquisitions or divestitures ("base volume")volume decreased net sales by $99.5$400.0 million or 3.8%13.8% in 20222023 compared to 2021.2022. Net sales of components to external customers decreased $11.9$17.6 million or 0.5%0.6% in 20222023 compared to 2021. Our 2021 divestiture decreased2022. Average unit price in 2023 increased net sales by $11.7$118.2 million or 0.5% of net sales in4.1% compared to 2022.

Net sales to external customers from facilities in the North American Residential segment in the year ended January 1,December 31, 2023, were $2,283.6$2,244.9 million, an increasea decrease of $330.7$38.7 million or 16.9%1.7% from $1,952.9$2,283.6 million in the year ended January 2,1, 2023. Foreign exchange rate fluctuations negatively impacted net sales in 2023 by $9.3 million. The 2023 acquisitions increased net sales by $248.1 million or 10.9%. Excluding the exchange rate impact and our 2023 acquisitions, net sales would have decreased by $277.5 million or 12.2% due to changes in volume, average unit price and sales of components. Lower base volume decreased net sales by $340.0 million or 14.9% in 2023 compared to 2022 due to softening end market demand in new construction and residential repair, renovation and remodeling channels. Average unit price increased net sales in 2023 by $61.1 million or 2.7% compared to 2022. Net sales of components to external customers were $1.4 million higher in 20222023 compared to 2022.

Net sales to external customers from facilities in the Europe segment in the year ended December 31, 2023, were negatively$247.0 million, a decrease of $33.8 million or 12.0% from $280.8 million in the year ended January 1, 2023. Net sales in 2023 were positively impacted by $13.2$1.3 million as a result of foreign exchange fluctuations. Excluding this exchange rate impact, net sales would have decreased by $35.1 million or 12.5% due to changes in volume, average unit price and sales of components. Lower base volume decreased net sales by $32.0 million or 11.4% compared to 2022 due to overall economic trends in the United Kingdom. Net sales of components to external customers were $2.9 million lower in 2023 compared to 2022. Average unit price decreased net sales in 2023 by $0.2 million or 0.1% compared to 2022.

Our cost of goods sold is comprised of the cost to manufacture products for our customers and includes the cost of materials, direct labor, overhead, distribution and depreciation associated with assets used to manufacture products. Research and development costs are primarily included within cost of goods sold. We incur significant fixed and variable overhead at our global component locations that manufacture interior molded door facings.

Cost of goods sold as a percentage of net sales was 76.7%76.5% and 76.4%76.7% for the years ended January 1,December 31, 2023, and January 2, 2022,1, 2023, respectively. Material cost of sales as a percentage of net sales increased by 1.8% in 2022 compared to 2021. Direct labor,and distribution overhead and depreciation as a percentage of net sales decreased by 0.7%,3.1% and 0.4%, 0.2% and 0.2%, respectively, in 2023 compared to the 2021 period.2022. The increasedecrease in material cost of sales as a percentage of net sales was driven by commodity inflation and an increase in logistics costs, partially offset by higher average unit priceslower inbound freight, tariff reductions and material cost savings projects. Direct laborDistribution as a percentage of net sales decreased due to outbound freight deflation. Overhead, direct labor and depreciation as a percentage of net sales increased by 2.1%, 0.7% and 0.5%, respectively, compared to the 2022 period. Overhead as a percentage of net sales increased due to higher average unit prices, partially offset by manufacturingfactory costs and wage and benefit inflation and startup costs. Distributionas compared to 2022. Direct labor as a percentage of net sales

Selling, general and administration ("SG&A") expenses primarily include the costs for our sales organization and support staff at various plants and corporate offices. These costs include personnel costs for payroll, related benefits and stock based compensation expense; professional fees; depreciation and amortization of our non-manufacturing equipment and assets; environmental, health and safety costs; advertising expenses and rent and utilities related to administrative office facilities. In the year ended January 1,December 31, 2023, selling, general and administration expenses, as a percentage of net sales, were 11.9%14.5%, remaining flat compared to 11.9% in the year ended January 2, 2022.1, 2023.

Selling, general and administration expenses in the year ended January 1,December 31, 2023, were $344.6$411.6 million, an increase of $36.2$67.0 million from $308.4$344.6 million in the year ended January 2, 2022.1, 2023. The overall increase was driven by incremental SG&A from the 2023 acquisitions of $42.7 million; a $16.2$12.3 million increase in non-cash items including loss (gain) on disposal of property, plant and equipment, depreciation and amortization, deferred compensation and share based compensation; $5.5 million in acquisition and due diligence related costs and legal costs related to the settlement of Canada class action litigation; a $5.2 million increase in professional and other fees to support growth; and a $1.3 million increase in personnel costs primarily driven by increased incentive compensation, wage and benefit inflation and resource investments to support growth; a $9.9 million increase in professional and other fees to support growth, $6.8 million in acquisition and due diligence related costs; a $5.4 million increase in travel expense as business activities fully returned to pre-pandemic levels; a $3.2 million increase in advertising and a $0.2 million increase in non-cash items including share based compensation; deferred compensation; gain on disposal of property, plant and equipment; and depreciation and amortization. These increases were partially offset by favorable foreign exchange impacts of $4.5 million and $1.0 million of incremental SG&A savings from our 2021 divestiture.compensation.

Restructuring costs in the year ended January 1,December 31, 2023, were $1.9$10.1 million, compared to $5.6$1.9 million in the year ended January 2, 2022.1, 2023. Restructuring costs in 20222023 primarily related to severance and closure costs associated with the 2022 Plan. Restructuring costs in the prior year period primarily related to severance and closure costs associated with the 2021, 2020 and 2019 Plans.2022 Plan.

There were no assetAsset impairment charges in the year ended January 1,December 31, 2023 were $33.1 million compared to $69.9 millionnone in the year ended January 2, 2022.1, 2023. Asset impairment charges in 20212023 resulted from a goodwill impairment charge recorded in our Architectural reporting unit and actions associated with the 2021 and 2020 Plans in our ArchitecturalEurope reporting unit. Refer to Note 14. Asset Impairment, in Item 8 of this Annual Report for additional information.

Loss on disposal of subsidiaries represents the difference between proceeds received upon disposition and the book value of a subsidiary which has been divested and was excluded from treatment as a discontinued operation. Also included in loss on disposal of subsidiaries is recognition of the cumulative translation adjustment out of accumulated other comprehensive loss. Loss on disposal of subsidiaries was zero in the year ended December 31, 2023, compared to $0.9 million in the year ended January 1, 2023, compared to $8.6 million in the year ended January 2, 2022.2023. The currentprior year loss arose as a result of the liquidation of our legal entity in Turkey and is comprised of $0.7 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. The prior 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 loss.

Interest expense, net, in the year ended January 1,December 31, 2023, was $41.3$50.8 million, compared to $46.1$41.3 million in the year ended January 2, 2022.1, 2023. The decreaseincrease in interest expense, net is primarily due to the refinancing of our senior notes in 2021.

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 year ended January 1,December 31, 2023, was $5.0$2.1 million of income, compared to $15.6$5.0 million of expense in the year ended January 2, 2022.1, 2023. The change in other (income) expense, net is primarily due to a pre-tax pension settlement charge of $23.3 million recognized in the fourth quarter of 2021, partially offset by unrealized gains and losses on foreign currency remeasurements, a change in the fair valuenon-recurring expense.

Income tax expense in the year ended January 1,December 31, 2023, was $71.8$40.9 million, compared to $44.8$71.8 million in the year ended January 2, 2022.1, 2023. The increasedecrease in income tax expense is primarily due to (i)the decrease in the overall pre-tax earnings and the mix of income orand losses within the tax jurisdictions with various tax rates in which we operate, primarily the increase in overall pre-tax book earnings, and (ii) an increase in income tax expense attributable to recognizing additional valuation allowance.operate.

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 that 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 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:

This definition of Adjusted EBITDA differs from the definitions of EBITDA contained in the indenture governing the 2030 Notes, the 2028 Notes and the credit agreements governing the Term Loan Facility and the ABL Facility. Adjusted EBITDA is used to evaluate and compare the 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.

We believe that Adjusted EBITDA, from an operations standpoint, provides an appropriate way to measure and assess segment performance. Our management team has established the practice of reviewing the performance of each segment based on the measures of net sales and Adjusted EBITDA. We believe that Adjusted EBITDA is useful to users of the consolidated financial statements because it provides the same information that we use internally to evaluate and compare the performance of the segments and it is one of the primary measures used to determine employee incentive compensation.