Diluted earnings per share were $0.35 compared to $0.39 in the second quarter of 2023. Adjusted diluted earnings per share¹ were $0.45 compared to $0.44 in the second quarter of 2023. In the second quarter of 2024, adjusted diluted earnings per share¹ has been revised to exclude amortization expense, including those related to acquisitions. Prior period information has been recast to reflect the updated presentation.

Balance Sheet, Cash Flow and Share Repurchases

As of June 30, 2024, the Company had $189.4 million in cash and $727.3 million of availability under its new revolving credit facility. Total debt was $688.9 million and our ratio of total debt to net income from the most recent four quarters was 3.9x as of June 30, 2024. Net debt¹ was $499.5 million and net debt to adjusted EBITDA¹ was 1.3x.

Operating cash flow was $96.1 million for the twenty-six weeks ended June 30, 2024, compared to $194.0 million in the twenty-six weeks ended June 25, 2023. This decline was due to a benefit in the prior year from a strategic inventory build release. Free cash flow¹ was $77.8 million for the twenty-six weeks ended June 30, 2024, compared to $182.6 million for the twenty-six weeks ended June 25, 2023.

During the twenty-six weeks ended June 30, 2024, the Company repurchased approximately 371 thousand shares of common stock for approximately $6.5 million.

Supreme Cabinetry Brands Acquisition

Subsequent to the quarter ended June, 30, 2024, the Company closed the acquisition of Supreme Cabinetry Brands for a net cash payment of $520 million, subject to customary adjustments as set forth in the merger agreement. Total pre-tax acquisition-related charges in the second quarter of 2024, due to transaction costs, were $4.4 million. MasterBrand expects to deliver $28 million of annual run-rate cost synergies by the end of year three, and anticipates commercial synergies across the combined Company’s complementary channels and product lines. The transaction is expected to be accretive to adjusted EBITDA margin¹ and to adjusted diluted earnings per share¹ in 2024, exclusive of acquisition-related charges.

2024 Financial Outlook

For full year 2024, the Company has increased its outlook following the closing of the Supreme Cabinetry Brands acquisition. On a consolidated basis the Company expects:

• Net sales year-over-year increase of low single-digit percentage

  • Organic decline of low single-digit percentage

  • Acquisition-related increase of mid single-digit percentage

• Adjusted EBITDA^1,2 in the range of $385 million to $405 million, with related adjusted EBITDA margin^1,2 of roughly 14.0% to 14.5%

• Adjusted Diluted EPS^1,2 in the range of $1.50 to $1.62

The Company expects organic net sales performance to be in line to slightly better than the underlying market demand, as new products and channel specific offerings gain traction.

"We are pleased with our second quarter financial performance, as end market demand remained mixed," said Andi Simon, Executive Vice President and Chief Financial Officer. "Feedback from our channels and recent macroeconomic indicators, suggests end market demand will trend towards the lower end of our original range for the legacy MasterBrand business. Despite this end market softness, we believe we will now deliver year-on-year net sales growth and increased profitability, following the successful closing of the Supreme acquisition."

Conference Call Details

The Company will hold a live conference call and webcast at 4:30 p.m. ET today, August 6, 2024, to discuss the financial results and business outlook. Telephone access to the live call will be available at (877) 407-4019 (U.S.) or by dialing (201) 689-8337 (international). The live audio webcast can be accessed on the "Investors" section of the MasterBrand website www.masterbrand.com.

A telephone replay will be available approximately one hour following completion of the call through August 20, 2024. To access the replay, please dial 877-660-6853 (U.S.) or 201-612-7415 (international). The replay passcode is 13747550. An archived webcast of the conference call will also be available on the "Investors" page of the Company's website.

Non-GAAP Financial Measures

To supplement the financial information presented in accordance with generally accepted accounting principles in the United States ("GAAP") in this earnings release, certain non-GAAP financial measures as defined under SEC rules have been included. It is our intent to provide non-GAAP financial information to enhance understanding of our financial information as prepared in accordance with GAAP. Non-GAAP financial measures should be considered in addition to, not as a substitute for, other financial measures prepared in accordance with GAAP. Our methods of determining these non-GAAP financial measures may differ from the methods used by other companies for these or similar non-GAAP financial measures. Accordingly, these non-GAAP financial measures may not be comparable to measures used by other companies.

We use EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income margin, adjusted diluted earnings per share ("adjusted diluted EPS"), free cash flow, net debt, and net debt to adjusted EBITDA, which are all non-GAAP financial measures. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. We evaluate the performance of our business based on income before income taxes, but also look to EBITDA as a performance evaluation measure because interest expense is related to corporate functions, as opposed to operations. For that reason, we believe EBITDA is a useful metric to investors in evaluating our operating results. Adjusted EBITDA is calculated by removing the impact of non-operational results and special items from EBITDA. Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net sales. Adjusted net income is calculated by removing the impact of non-operational results, including non-cash amortization expense, which is not deemed to be indicative of the results of current or future operations, and special items from net income. Adjusted net income margin is calculated as adjusted net income divided by net sales. Adjusted diluted EPS is a measure of our diluted earnings per share excluding non-operational results and special items. These non-GAAP measures are useful to investors as they are representative of our core operations and are used in the management of our business, including decisions concerning the allocation of resources and assessment of performance.

Free cash flow is defined as cash flow from operations less capital expenditures. We believe that free cash flow is a useful measure to investors because it is a meaningful indicator of cash generated from operating activities available for the execution of our business strategy, and is used in the management of our business, including decisions concerning the allocation of resources and assessment of performance. Net debt is defined as total balance sheet debt less cash and cash equivalents. We believe this measure is useful to investors as it provides a measure to compare debt less cash and cash equivalents across periods on a consistent basis. Net debt to adjusted EBITDA is calculated by dividing net debt by the trailing twelve months adjusted EBITDA. Net debt to adjusted EBITDA is used by management to assess our financial leverage and ability to service our debt obligations.

As required by SEC rules, see the financial statement section of this earnings release for detailed reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measure. We have not provided a reconciliation of our fiscal 2024 adjusted EBITDA, adjusted EBITDA margin and adjusted diluted EPS guidance because the information needed to reconcile these measures is unavailable due to the inherent difficulty of forecasting the timing or amount of various items that have not yet occurred, including gains and losses associated with our defined benefit plans and restructuring and other charges, which are excluded from adjusted EBITDA, adjusted EBITDA margin and adjusted diluted EPS. Additionally, estimating such GAAP measures and providing a meaningful reconciliation consistent with the Company’s accounting policies for future periods requires a level of precision that is unavailable for these future periods and cannot be accomplished without unreasonable effort. Forward-looking non-GAAP measures are estimated consistent with the relevant definitions and assumptions used for historical non-GAAP measures.

About MasterBrand:

MasterBrand, Inc. (NYSE: MBC) is the largest manufacturer of residential cabinets in North America and offers a comprehensive portfolio of leading residential cabinetry products for the kitchen, bathroom and other parts of the home. MasterBrand products are available in a wide variety of designs, finishes and styles and span the most attractive categories of the cabinets market: stock, semi-custom and premium cabinetry. These products are delivered through an industry-leading distribution network of over 6,000 dealers, major retailers and builders. MasterBrand employs over 13,000 associates across more than 20 manufacturing facilities and offices. Additional information can be found at www.masterbrand.com.

Forward-Looking Statements:

Certain statements contained in this Press Release, 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 Part I, Item 1A of our Form 10-K for the fiscal year ended December 31, 2023, and other filings with the SEC.

The forward-looking statements included in this document are made as of the date of this Press Release and, except pursuant to any obligations to disclose material information under the federal securities laws, we undertake no obligation to update, amend or clarify any forward-looking statements to reflect events, new information or circumstances occurring after the date of this Press Release.

Some of the important factors that could cause our actual results to differ materially from those projected in any such forward-looking statements include:

• Our ability to develop and expand our business;

• Our ability to develop new products or respond to changing consumer preferences and purchasing practices;

• Our anticipated financial resources and capital spending;

• Our ability to manage costs;

• Our ability to effectively manage manufacturing operations, and capacity or an inability to maintain the quality of our products;

• The impact of our dependence on third parties to source raw materials and our ability to obtain raw materials in a timely manner or fluctuations in raw material costs;

• Our ability to accurately price our products;

• Our projections of future performance, including future revenues, capital expenditures, gross margins, and cash flows;

• The effects of competition and consolidation of competitors in our industry;

• Costs of complying with evolving tax and other regulatory requirements and the effect of actual or alleged violations of tax, environmental or other laws;

• The effect of climate change and unpredictable seasonal and weather factors;

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

• The expected strength of our existing customers and consumers and any loss or reduction in business from one or more of our key customers or increased buying power of large customers;

• Information systems interruptions or intrusions or the unauthorized release of confidential information concerning customers, employees, or other third parties;

• Worldwide economic, geopolitical and business conditions and risks associated with doing business on a global basis;

• The effects of a public health crisis or other unexpected event;

• The inability to recognize or delays in obtaining, anticipated benefits of the acquisition of Supreme Cabinetry Brands, Inc. (the "Acquisition"), 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;

• The impact of our current and any additional future debt obligations on our business, current and future operations, profitability and our ability to meet other obligations;

• Business disruption following the Acquisition;

• Diversion of management time on Acquisition-related issues;

• The reaction of customers and other persons to the Acquisition; and

• Other statements contained in this Press Release regarding items that are not historical facts or that involve predictions.

 

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