MasterBrand, Inc. Q1 FY2026 earnings call

• Business update: First quarter results reflect disciplined execution against a challenging backdrop. Advanced tariff mitigation efforts and fully executed $30 million cost actions.
• Financial results: Net sales $618 million, adjusted EBITDA $28 million with margin 4.5%. SG&A expenses affected by acquisition-related costs and freight. Interest expense declined. Net loss $15.4 million.
• Trade environment: Supreme Court ruling led to 10% global tariff, set to expire in late July. First quarter gross tariff costs ~$25 million, mitigation efforts exceeded expectations.
• Operational actions: Took further cost structure aligning actions, fully executed $30 million cost savings initiative. Progress on Supreme integration and pending merger with American Woodmark.
• Continuous improvement: Teams made progress on core efficiency gains offsetting inflation.

In the first quarter, MasterBrand generated net sales of $618 million, a 6.4% decrease compared to the same period last year. Adjusted EBITDA for the quarter was $28 million compared to $67 million in the prior year period, and adjusted EBITDA margin was 4.5%. The new construction market faced persistent demand softness with U.S. single-family new construction down mid to high single digits. The repair and remodel business declined mid-single digits consistent with the broader market. The Canadian business declined low single digits mirroring U.S. trends.

• Second quarter outlook: Net sales expected mid to high single digits down sequentially improved from Q1. Adjusted EBITDA expected $51 - $61 million, margin 7.8 - 8.8%. Adjusted diluted EPS 3 - 13 cents.
• Full year: Addressable market down mid-single digits. Decremental margins elevated in first half, expected to improve in second half. Interest expense flat to down. Free cash flow expected in excess of net income. Unmitigated tariff exposure ~5 - 6% of net sales.

• Demand softness: Persistent softness in new construction and repair and remodel markets.
• Macro-economic uncertainty: Affordability concerns, low consumer confidence, and geopolitical tensions impact market.
• Trade environment volatility: Tariffs remain a significant factor with uncertain expiration and potential changes.
• Tariff impact: Tariff costs continue to flow through, affecting margins if not mitigated effectively.

Q: McLaren Hayes from Zellman and Associates asked about market outlook and consumer behavior.

A: Outlook is mid to high single digits down, new construction choppy, R&R steady.

Q: Garrick Chamois from Loop Capital Markets inquired about product mix and incremental margins.

A: General trade down behavior, higher volume expected to slightly improve mix, incrementals expected to improve year-over-year.

Q: Steven Ramsey from Thompson Research Group asked about pricing actions and gross tariff cost.

A: Taken actions on fuel costs, market competitive, gross tariff cost $25 million in Q1 with mitigation efforts affecting outlook.