MasterBrand, Inc. Q1 FY2025 earnings call

• Dave discussed market demand: year-over-year volume declines across all channels, with new construction end market demand expected to be down mid-single digits and repair and remodel down high- to mid-single digits in 2025. Canada's market was down high-single digits. • Facility consolidations: ongoing in North Carolina (combining Supreme and legacy premium facility) and West Coast (relocating Colton, CA to North Las Vegas, NV). • Cost actions: reducing ~500 production positions, trimming corporate/administrative staff, cutting discretionary expenses, and slowing spending in selected areas. • Strategic initiatives: Align to Grow (focusing on right market/customer/product), Lead Through Lean (97% of frontline supervisors completed True Leader program), Tech Enabled (reduced 2025 investment by ~20% but still aiming to connect with consumers digitally).

Net sales for the first quarter were $660 million, a 3% increase compared to the same period last year. This was driven by 10% growth from the Supreme acquisition and 2% growth from net ASP increases in the legacy business, partially offset by a 9% market volume decline in the base business. The Supreme acquisition contributed positively, while the base business was impacted by market volume declines.

• 2025 net sales expected to be a low single-digit percentage decline year-over-year. • Adjusted EBITDA range: $315 million to $365 million with margins 12% to 13.5%. • Adjusted diluted EPS range: $1.03 to $1.32. • Capital expenditures expected to be $75 million to $85 million, down $10 million from previous range. • Free cash flow expected to be in excess of net income for 2025.

• Tariffs creating uncertainty in consumer confidence and impact on end market demand. • Market volume declines in new construction and repair and remodel markets. • Choppy demand patterns affecting inventory and operational efficiency.

Q: How is pricing being handled to counteract tariffs and any impact on demand?

A: Using surcharge methodology for tariff-related pricing, with empathy for customers, and demand seen as choppy with pre-buying not indicating future trends.

Q: Thoughts on margin progression in 2Q?

A: Sales better than Q1, EBITDA better than Q1, but decrementals year-over-year not up to standard due to tariff costs and ongoing factory footprint adjustments.

Q: How does the EBITDA range get to top or low end?

A: Range dictated by market demand, including share gain performance and impact of tariffs on demand.

Q: MasterBrand's position relative to others in tariffs and inventory?

A: 80% production in US provides some insulation; inventory growth due to slow demand and uncertainty in tariff impact leading to safety stock.