MasterBrand, Inc.

Previous wording

Certain statements contained in this Quarterly Report on Form 10-Q, other than purely historical information, including, but not limited to, estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are forward-looking statements. Statements preceded by, followed by or that otherwise include the word “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may,” and “could” are generally forward-looking in nature and not historical facts. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations of our management. Although we believe that these statements are based on reasonable assumptions, they are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those indicated in such statements. These factors include those listed under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024 within Part I, Item 1A and in this Quarterly Report on Form 10-Q for the quarterly period ended March 30, 2025 within Part II, Item 1A.

Current wording

Certain statements contained in this Quarterly Report on Form 10-Q, other than purely historical information, including, but not limited to, estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are forward-looking statements. Statements preceded by, followed by or that otherwise include the word “believes,” “expects,” “anticipates,” “intends,” “projects,” “estimates,” “plans,” “may increase,” “may fluctuate,” and similar expressions or future or conditional verbs such as “will,” “should,” “would,” “may,” and “could” are generally forward-looking in nature and not historical facts. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations of our management. Although we believe that these statements are based on reasonable assumptions, they are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those indicated in such statements. These factors include those listed under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024 within Part I, Item 1A and in our Quarterly Reports on Form 10-Q for the quarterly periods ended March 30, 2025 and June 29, 2025 within Part II, Item 1A.

Previous wording

•Conditions in the housing market in the United States and Canada;

Current wording

•Conditions in the housing market in the United States, Canada and Mexico;

Previous wording

•The inability to recognize, or delays in obtaining, anticipated benefits of the acquisition of Supreme, including synergies, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain key employees;

Current wording

•The inability to recognize, or delays in obtaining, anticipated benefits of the Transaction and acquisition of American Woodmark, including synergies, which may be affected by, among other things, competition, the ability of the combined company to integrate operations in a successful manner and in the expected time period, grow and manage growth profitably, maintain relationships with customers and suppliers and retain key employees;

Previous wording

•Business disruption following the acquisition of Supreme;

Current wording

•Business disruption following the acquisition of American Woodmark and during the pendency of or following the Transaction;

Previous wording

•Diversion of management time on acquisition-related issues;

Current wording

•Diversion of management time on Transaction-related issues;

Previous wording

•The reaction of customers and other persons to the acquisition of Supreme; and

Current wording

•The reaction of customers and other persons to the acquisition of American Woodmark and the Transaction; and

Previous wording

Unless the context otherwise requires, references to years and quarters contained in this Quarterly Report on Form 10-Q pertain to our fiscal years and fiscal quarters. Additionally, unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to: (1) “2025,” or “fiscal 2025” refers to our 2025 fiscal year that is a 52-week period that will end on December 28, 2025; and (2) “2024,” or “fiscal 2024” refers to our 2024 fiscal year that was a 52-week period that ended on December 29, 2024. Furthermore, unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to: (1) “the first quarter of 2025” refers to the thirteen week period that ended on March 30, 2025; and (2) “the first quarter of 2024” refers to the thirteen week period that ended on March 31, 2024.

Current wording

Unless the context otherwise requires, references to years and quarters contained in this Quarterly Report on Form 10-Q pertain to our fiscal years and fiscal quarters. Additionally, unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to: (1) “2025,” or “fiscal 2025” refers to our 2025 fiscal year that is a 52-week period that will end on December 28, 2025; and (2) “2024,” or “fiscal 2024” refers to our 2024 fiscal year that was a 52-week period that ended on December 29, 2024. Furthermore, unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to: (1) “the second quarter of 2025” refers to the thirteen week period that ended on June 29, 2025; (2) “the second quarter of 2024” refers to the thirteen week period that ended on June 30, 2024; (3) “the first half of 2025” refers to the twenty-six weeks ended June 29, 2025; and (4) “the first half of 2024” refers to thetwenty-six weeks ended June 30, 2024.

Previous wording

Net sales were $660.3 million for the thirteen weeks ended March 30, 2025 compared to $638.1 million for the thirteen weeks ended March 31, 2024, an increase of $22.2 million, or 3.5 percent. The first quarter of 2025 includes $60.8 million of incremental sales related to the Supreme acquisition. Excluding the impact of Supreme, the $38.6 million decrease in net sales from the thirteen weeks ended March 31, 2024 was driven primarily by lower sales unit volume of $48.2 million, partially offset by the favorable combined net impact of price and mix on our overall average selling price of $10.6 million. Overall end market demand was weaker in the first quarter of 2025 compared to the first quarter of 2024 in the repair and remodel and single-family new construction markets. Foreign currency impact was unfavorable by $1.0 million during the thirteen weeks ended March 30, 2025 as compared to the thirteen weeks ended March 31, 2024.

Current wording

Net sales were $730.9 million for the thirteen weeks ended June 29, 2025 compared to $676.5 million for the thirteen weeks ended June 30, 2024, an increase of $54.4 million, or 8.0 percent. The second quarter of 2025 includes $70.7 million of incremental sales related to the Supreme acquisition. Excluding the impact of Supreme, the $16.3 million decrease in net sales from the thirteen weeks ended June 30, 2024 was driven primarily by lower sales unit volume of $35.0 million, partially offset by the favorable combined net impact of price and mix on our overall average selling price of $18.9 million. Overall end market demand was weaker in the second quarter of 2025 compared to the second quarter of 2024 in the repair and remodel and single-family new construction markets. Foreign currency impact was unfavorable by $0.2 million during the thirteen weeks ended June 29, 2025 as compared to the thirteen weeks ended June 30, 2024.

Previous wording

Compared to the thirteen weeks ended March 31, 2024, net sales to dealers, whose end customers include builders, professional trades and home remodelers, increased $38.1 million, or 12.1 percent, and net sales to retailers, including through their respective retail internet website portals, declined $19.4 million, or 8.0 percent. Net sales directly to builders increased $3.5 million, or 4.4 percent.

Current wording

Compared to the thirteen weeks ended June 30, 2024, net sales to dealers, whose end customers include builders, professional trades and home remodelers, increased $57.3 million, or 16.2 percent, and net sales to retailers, including through their respective retail internet website portals, declined $8.7 million, or 3.8 percent. Net sales directly to builders increased $5.8 million, or 6.3 percent.

Previous wording

Cost of products sold increased by $24.7 million, or 5.7 percent, to $458.1 million (69.4 percent of net sales) in the thirteen weeks ended March 30, 2025 as compared to $433.4 million (67.9 percent of net sales) in the thirteen weeks ended March 31, 2024. The inclusion of Supreme in the thirteen weeks ended March 30, 2025 resulted in an incremental $39.4 million of cost of products sold. Excluding the impact of Supreme, the $14.7 million decrease in cost of products sold was driven primarily by lower sales unit volume of $34.1 million, partially offset by the combined net impact of costs and mix of $19.4 million. In the first quarter, realized savings from various cost reduction actions were more than offset by higher manufacturing costs, including unfavorable fixed cost leverage, inthe thirteen weeks ended March 30, 2025.

Current wording

Cost of products sold increased by $45.7 million, or 10.3 percent, to $491.2 million (67.2 percent of net sales) in the thirteen weeks ended June 29, 2025 as compared to $445.5 million (65.9 percent of net sales) in the thirteen weeks ended June 30, 2024. The inclusion of Supreme in the thirteen weeks ended June 29, 2025 resulted in an incremental $47.0 million of cost of products sold. Excluding the impact of Supreme, the $1.3 million decrease in cost of products sold was driven primarily by lower sales unit volume of $21.9 million, partially offset by the combined net impact of costs and mix of $20.6 million. In the second quarter of 2025, realized savings from various cost reduction actions were more than offset by higher manufacturing costs, including unfavorable fixed cost leverage.

Previous wording

Restructuring charges were $4.7 million in the thirteen weeks ended March 30, 2025, as compared to restructuring charges of $0.4 million in the thirteen weeks ended March 31, 2024. Charges in the thirteen weeks ended March 30, 2025 are largely related to severance costs and other employee-related costs in order to better align our workforce with our forecasted demand within our manufacturing footprint.

Current wording

Restructuring charges were $6.6 million in the thirteen weeks ended June 29, 2025, compared to restructuring charges of $2.8 million in the thirteen weeks ended June 30, 2024. Charges in both periods are largely related to severance costs and other employee-related costs in order to better align our workforce with our forecasted demand within our manufacturing footprint.

Previous wording

The effective income tax rates for thethirteen weeks ended March 30, 2025 and March 31, 2024, were 23.1 percent and 23.5 percent, respectively. The decrease in effective tax rate between the periods is primarily the result of lower foreign income taxed at higher rates, return-to-provision adjustments, and foreign inclusions net of foreign tax credits, partially offset by an increase in the valuation allowance and a reduction in the stock compensation windfall benefits for shares which vested.

Current wording

The effective income tax rates for thethirteen weeks ended June 29, 2025 and June 30, 2024, were 23.9 percent and 24.6 percent, respectively. The net decrease in the effective tax rate between the periods is primarily due to lower state and local income taxes and changes in foreign exclusions, partially offset by an increase in the valuation allowance and a reduction in the stock compensation windfall benefit for shares which vested.

Previous wording

The difference between our effective income tax rate for the thirteen weeks ended March 31, 2024, and the U.S. statutory rate of 21.0 percent is primarily due to the unfavorable impact of state and local income taxes, foreign income inclusions net of foreign tax credits and nondeductible compensation, partially offset by the stock compensation windfall benefit for shares which vested and the mix of earnings in jurisdictions with differing tax rates.

Current wording

The difference between our effective income tax rate for the thirteen weeks ended June 30, 2024, and the U.S. statutory rate of 21.0 percent is due to the unfavorable impact of state and local income taxes, nondeductible compensation and foreign income inclusions with offsetting tax credits, partially offset by the stock compensation windfall benefit for shares which vested and the mix of earnings in jurisdictions with differing tax rates.

Previous wording

Selling, general and administrative expenses increased by $16.2 million, or 11.8 percent, to $154.0 million (23.3 percent of net sales) in the thirteen weeks ended March 30, 2025 compared to $137.8 million (21.6 percent of net sales) in the thirteen weeks ended March 31, 2024. The increase in the thirteen weeks ended March 30, 2025 is primarily due to the inclusion of Supreme ($13.0 million), increased associate-related costs, net of lower variable compensation ($2.7 million) and acquisition-related costs ($1.6 million) associated with the acquisition of Supreme. These increases were partially offset by lower distribution costs ($3.0 million) as a result of the decrease in sales unit volume.

Current wording

Selling, general and administrative expenses increased by $28.9 million, or 10.2 percent, to $313.4 million (22.5 percent of net sales) in the twenty-six weeks ended June 29, 2025 compared to $284.5 million (21.6 percent of net sales) in the twenty-six weeks ended June 30, 2024. The increase in the twenty-six weeks ended June 29, 2025 is primarily due to the inclusion of Supreme ($26.1 million), increased associate-related costs, net of lower variable compensation ($3.1 million) and increased advertising costs ($2.3 million). These increases were partially offset by lower distribution and commission costs ($2.9 million), as a result of the decrease in sales unit volume, and lower acquisition-related costs ($1.0 million).

Previous wording

Interest expense was $19.4 million in the thirteen weeks ended March 30, 2025 as compared to $14.1 million in the thirteen weeks ended March 31, 2024. The increase in interest expense for the thirteen weeks ended March 30, 2025 is due to the higher outstanding debt balance in 2025 as a result of the debt refinancing transaction in the second quarter of 2024 associated with the acquisition of Supreme.

Current wording

Interest expense was $38.3 million in the twenty-six weeks ended June 29, 2025 as compared to $34.7 million in the twenty-six weeks ended June 30, 2024. The increase in interest expense for the twenty-six weeks ended June 29, 2025 is due to the higher outstanding debt balance in 2025 as a result of the debt refinancing transaction in the second quarter of 2024 associated with the acquisition of Supreme. The second quarter of 2024 includes $6.5 million of nonrecurring interest expense in connection with the debt refinancing transaction, including the write-off of deferred financing fees.

Previous wording

Our condensed consolidated income before taxes, income tax expense, and effective tax rate for the thirteen week periods ended March 30, 2025 and March 31, 2024 were as follows:

Current wording

Our condensed consolidated income before taxes, income tax expense, and effective tax rate for the twenty-six week periods ended June 29, 2025 and June 30, 2024 were as follows:

Previous wording

The difference between our effective income tax rate for thethirteen weeks ended March 30, 2025, and the U.S. statutory rate of 21.0 percent is primarily due to the unfavorable impact of net changes in state and local income taxes, nondeductible compensation, foreign income taxed at higher rates, an increase in the valuation allowance and foreign income inclusions net of foreign tax credits. These were partially offset by benefits for return-to-provision adjustments, thestock compensation windfall benefitfor shares which vested, tax credits, and foreign exclusions.

Current wording

The difference between our effective income tax rate for thetwenty-six weeks ended June 29, 2025, and the U.S. statutory rate of 21.0 percent is primarily due to the unfavorable impact of net changes in state and local income taxes, nondeductible compensation, foreign income taxed at higher rates, an increase in the valuation allowance and foreign income inclusions net of foreign tax credits. These were partially offset by the release of uncertain tax positions, thestock compensation windfall benefitfor shares which vested, and foreign exclusions.

Previous wording

In 2024, certain jurisdictions in which we operate enacted, or announced their intention to enact, legislation consistent with one or more Organization for Economic Co-operation and Development Global Anti-Base Erosion Model Rules (“Pillar Two”). The model rules include qualified domestic minimum top-up taxes, income inclusion rules, and undertaxed profit rules all aimed to ensure that multinationals pay a minimum effective corporate tax rate of 15 percent in each jurisdiction in which they operate, with some rules effective in 2024, 2025 or others becoming effective in 2026. The Pillar Two legislation, as enacted in certain jurisdictions in which we operate, does not materially impact our 2025 annual effective tax rate but is expected to unfavorably impact our annual effective tax rate in 2026. Further changes to our entity structure, enacted local legislation, or changes in jurisdictions in which we operate could also impact our future effective tax rate. Additionally, the new U.S. administration could modify key aspects of the tax code, including the Tax Cuts and Jobs Act of 2017, which could materially affect our tax obligations and effective tax rate.

Current wording

more Organization for Economic Co-operation and Development Global Anti-Base Erosion Model Rules (“Pillar Two”). The model rules include qualified domestic minimum top-up taxes, income inclusion rules, and undertaxed profit rules all aimed to ensure that multinationals pay a minimum effective corporate tax rate of 15 percent in each jurisdiction in which they operate, with some rules effective in 2024, 2025 or others becoming effective in 2026. The Pillar Two legislation, as enacted in certain jurisdictions in which we operate, does not materially impact our 2025 annual effective tax rate but is expected to unfavorably impact our annual effective tax rate in 2026. Further changes to our entity structure, enacted local legislation, or changes in jurisdictions in which we operate could also impact our future effective tax rate.

Previous wording

Our operating income is generated by our subsidiaries. There are generally no restrictions on the ability of our subsidiaries to pay dividends or make other distributions to MasterBrand, other than the fact our subsidiaries have financial obligations that must be satisfied before funding us and such dividends are subject to applicable local law and may be limited due to terms of other contractual arrangements, including our indebtedness. We periodic ally review our portfolio of brands, manufacturing and supply chain footprint, and evaluate potential strategic transactions to increase stockholder value. However, we cannot predict whether or when we may enter into acquisitions, joint ventures or dispositions, or what impact any such transactions could have on our results of operations, cash flows or financial condition. Our cash flows from operations, borrowing availability and overall liquidity are subject to certain risks and uncertainties, including those described in the section entitled “Risk Factors” within Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.

Current wording

Our operating income is generated by our subsidiaries. There are generally no restrictions on the ability of our subsidiaries to pay dividends or make other distributions to MasterBrand, other than the fact our subsidiaries have financial obligations that must be satisfied before funding us and such dividends are subject to applicable local law and may be limited due to terms of other contractual arrangements, including our indebtedness. We periodic ally review our portfolio of brands, manufacturing and supply chain footprint, and evaluate potential strategic transactions to increase stockholder value. However, we cannot predict whether or when we may enter into acquisitions, joint ventures or dispositions, or what impact any such transactions could have on our results of operations, cash flows or financial condition. Our cash flows from operations, borrowing availability and overall liquidity are subject to certain risks and uncertainties, including those described in the section entitled “Risk Factors” within Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, and within Part II, Item 1A of our Quarterly Reports on Form 10-Q for the quarters ended March 30, 2025 and June 29, 2025.

Previous wording

On November 18, 2022, we entered into a 5-year, $1.25 billion credit agreement, consisting of a $750.0 million term loan and a $500.0 million revolving credit facility. The 2022 Credit Agreement was secured by certain assets as well as the guarantee of certain of our subsidiaries. On June 27, 2024, the Company refinanced this debt by completing the Offering of $700.0 million aggregate principal amount of the Senior Notes and entered into the 2024 Credit Agreement. The Company used the funds from the refinancing transaction, and cash on-hand, to: 1) refinance the 2022 Credit Agreement (including repaying all amounts outstanding under the existing term loan, inclusive of accrued and unpaid interest), 2) fund the acquisition of Supreme on July 10, 2024, and 3) to pay all fees and expenses related to the foregoing transactions. In July 2024, upon closing, we funded the acquisition with a combination of cash on hand and $430.0 million of proceeds from the revolving credit facility provided for by the 2024 Credit Agreement.

Current wording

On November 18, 2022, we entered into a 5-year, $1.25 billion credit agreement, consisting of a $750.0 million term loan and a $500.0 million revolving credit facility. The 2022 Credit Agreement was secured by certain assets as well as the guarantee of certain of our subsidiaries. On June 27, 2024, the Company refinanced this debt by completing the Offering of $700.0 million aggregate principal amount of Senior Notes and entered into the 2024 Credit Agreement. The Company used the funds from the refinancing transaction, and cash on-hand, to: 1) refinance the 2022 Credit Agreement (including repaying all amounts outstanding under the existing term loan, inclusive of accrued and unpaid interest), 2) fund the acquisition of Supreme on July 10, 2024, and 3) to pay all fees and expenses related to the foregoing transactions. In July 2024, upon closing, we funded the acquisition with a combination of cash on hand and $430.0 million of proceeds from the revolving credit facility provided for by the 2024 Credit Agreement.

Previous wording

The Senior Notes will mature on July 15, 2032. Interest on the Senior Notes will accrue at a rate of 7.00 percent per annum and is payable semi-annually in arrears on January 15 and July 15, beginning on January 15, 2025.

Current wording

The Senior Notes will mature on July 15, 2032. Interest on the Senior Notes accrues at a rate of 7.00 percent per annum and is payable semi-annually in arrears on January 15 and July 15, beginning on January 15, 2025.

Previous wording

As of March 30, 2025, we had $1,058.2 million outstanding in third-party borrowings, net of deferred financing fees. We may also incur additional indebtedness in the future.

Current wording

As of June 29, 2025, we had $998.7 million outstanding in third-party borrowings, net of deferred financing fees. In conjunction with the Merger, the Company plans to arrange a revolver expansion with its current banking group under the 2024 Credit Agreement in order to pay off American Woodmark debt at the close of the transaction.

Previous wording

Below is a summary of cash flows for the thirteen weeks ended March 30, 2025 and March 31, 2024.

Current wording

Below is a summary of cash flows for the twenty-six weeks ended June 29, 2025 and June 30, 2024.

Previous wording

Net cash used by operating activities was $31.4 million in thefirst quarter of 2025 as compared to $18.7 million of net cash provided by operating activities in thefirst quarter of 2024. Net income contributed $13.3 million to operating cash flow in the first quarter of 2025, down from $37.5 million in the first quarter of 2024. In thefirst quarter of 2025, accounts receivable increased $30.0 million from the seasonally lower fiscal 2024 ending balance, compared to an increase of $21.7 million in the first quarter of 2024, reflecting higher sales in the first quarter of fiscal 2025. In thefirst quarter of 2025, inventory increased $12.2 million, reflective of the normal seasonal build in inventory from year-end, as compared to a decline in inventory of $1.6 million in the first quarter of 2024. Accounts payable was flat compared to the fiscal 2024 ending balance, while the movement in accounts payable favorably contributed $10.2 million to the first quarter 2024 operating cash flow.

Current wording

Net cash provided by operating activities was $53.4 million in the first half of 2025 as compared to $96.1 million in the first half of 2024. Net income contributed $50.6 million to operating cash flow in the first half of 2025, down from $82.8 million in the first half of 2024. In the first half of 2025, accounts receivable increased $26.9 million from the seasonally lower fiscal 2024 ending balance, compared to an increase of $11.2 million in the first half of 2024, reflecting higher sales in the first half of fiscal 2025. In the first half of 2025, inventory declined $0.2 million, as compared to an increase in inventory of $20.7 million in the first half of 2024. The minimal change in inventory in the first half of 2025 is reflective of inventory management efforts. In the first half of 2025, accounts payable decreased $5.5 million compared to an increase of $21.8 million in the first half of 2024. The reduced favorability in accounts payable in 2025 was driven by the lack of growth in inventory.

Previous wording

Net cash used in investing activities was $9.8 million in thefirst quarter of 2025, compared to net cash used in investing activities of $7.0 million infirst quarter of 2024. The year-over-year increase is due to increased capital expenditures as compared to the prior year.

Current wording

Net cash used in investing activities was $24.3 million in the first half of 2025, compared to $11.9 million in the first half of 2024. The year-over-year increase is primarily due to increased capital expenditures as compared to the prior year.