MasterBrand Reports Third Quarter 2024 Financial Results

Net sales increased 6.0% year-over-year to $718.1 million

Net income was $29.1 million compared to $59.7 million in the prior year, with net income margin of 4.1% and 8.8%, respectively

Adjusted EBITDA margin ¹ decreased 160 basis points year-over-year to 14.6%

Diluted earnings per share was $0.22 compared to $0.46 in the prior year quarter; adjusted diluted earnings per share ¹ was $0.40 compared to $0.49 in the prior year quarter

Operating cash flow for the thirty-nine weeks ended September 29, 2024 was $176.9 million with free cash flow ¹ of $142.3 million

Reiterates 2024 financial outlook

MasterBrand, Inc. (“Company,” or “MasterBrand”), the largest residential cabinet manufacturer in North America, announced third quarter 2024 financial results.

“We are pleased to announce that our third quarter financial performance was in-line with our expectations, as we continued to navigate choppiness in our end markets,” said Dave Banyard, President and Chief Executive Officer. “Our associates performed at an exceptionally high level in the quarter, delivering on our core business objectives and making steady progress on the integration of our Supreme acquisition. We are encouraged to see our highly complementary products, dealer channel and operations coming together as planned.”

“As we look to close out 2024, we remain focused on positioning the Company for growth in any end market environment and delivering superior financial returns for our shareholders,” Banyard continued.

Third Quarter 2024

Net sales were $718.1 million, an increase of 6% compared to the third quarter of 2023, driven by the 9% of growth from our Supreme acquisition. This increase was partially offset by lower average selling price (ASP) of 3%, with volume and foreign exchange having no impact on year-over-year performance. Gross profit was $238.0 million, compared to $237.5 million in the prior year. Gross profit margin decreased 200 basis points to 33.1%, on lower ASP, personnel and freight inflation, and a one-time benefit in the prior year period attributable to medical insurance rebates and insurance proceeds related to tornado damage sustained at our Jackson, Georgia facility. This was partially offset by additional cost savings from strategic initiatives and continuous improvement efforts and favorable variable compensation.

Net income was $29.1 million, compared to $59.7 million in the third quarter of 2023, a decrease of 51.3%, primarily due to acquisition-related costs, lower gross profit margin as discussed above, restructuring charges and higher interest expense, partially offset by favorable variable compensation and positive net income contribution from Supreme. Net income margin was 4.1% compared to 8.8% in the prior year.

Adjusted EBITDA ¹ was $104.5 million, compared to $109.8 million in the third quarter of 2023. Adjusted EBITDA margin ¹ decreased 160 basis points to 14.6%, driven by a decrease in gross profit margin.

Diluted earnings per share were $0.22 compared to $0.46 in the third quarter of 2023. Adjusted diluted earnings per share ¹ were $0.40 compared to $0.49 in the third quarter of 2023.

Balance Sheet, Cash Flow and Capital Allocation

As of September 29, 2024, the Company had $108.4 million in cash and $350.4 million of availability under its revolving credit facility. Total debt was $1,062.3 million and our ratio of total debt to net income from the most recent trailing twelve months was 7.2x as of September 29, 2024. For the same period, net debt ¹ was $953.9 million and our ratio of net debt to adjusted EBITDA ¹ was 2.5x.

Operating cash flow was $176.9 million for the thirty-nine weeks ended September 29, 2024, compared to $336.5 million in the thirty-nine weeks ended September 24, 2023. This decline was due to a benefit in the prior year from a strategic inventory build release. Free cash flow ¹ was $142.3 million for the thirty-nine weeks ended September 29, 2024, compared to $315.1 million for the thirty-nine weeks ended September 24, 2023.

During the thirty-nine weeks ended September 29, 2024, the Company repurchased approximately 371 thousand shares of common stock for approximately $6.5 million. No shares were repurchased in the quarter ended September 29, 2024.

2024 Financial Outlook

For full year 2024, the Company reiterates prior expectations:

• 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 with the underlying market demand, as new products, channel specific offerings, and previously implemented price actions gain traction.

“Our third quarter financial performance was driven by our continued operational excellence and our acquisition of Supreme, as we delivered year-over-year net sales growth in a softer end market environment,” said Andi Simon, Executive Vice President and Chief Financial Officer. “In-line with our prior expectations, we believe demand trends across our R&R and new construction end markets will remain mixed for the balance of the year. With these factors in mind, our 2024 outlook is unchanged; we anticipate year-over-year growth in net sales and profitability.”

For full results click here.

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 4,500 dealers, major retailers and builders. MasterBrand employs over 13,600 associates across more than 20 manufacturing facilities and offices. Additional information can be found at www.masterbrand.com.

Source: Masterbrand, Inc.