MasterBrand, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS MasterBrand, Inc. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) 13 Weeks Ended (U.S. Dollars presented in millions, except per share amounts) March 26, 2023 March 27, 2022 NET SALES $ 676.7 $ 777.1 Cost of products sold 472.1 566.1 GROSS PROFIT 204.6 211.0 Selling, general and administrative expenses 135.3 145.1 Amortization of intangible assets 4.0 4.4 Restructuring adjustments ( 0.4 ) — OPERATING INCOME 65.7 61.5 Related party interest income, net — ( 1.1 ) Interest expense 17.4 — Other expense, net 0.4 0.9 INCOME BEFORE TAXES 47.9 61.7 Income tax expense 12.9 14.8 NET INCOME $ 35.0 $ 46.9 Average Number of Shares of Common Stock Outstanding Basic 128.2 128.0 Diluted 129.5 128.0 Earnings Per Common Share Basic $ 0.27 $ 0.37 Diluted $ 0.27 $ 0.37 See notes to consolidated financial statements. 1 Table of Contents MasterBrand, Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) 13 Weeks Ended (U.S. Dollars presented in millions) March 26, 2023 March 27, 2022 NET INCOME $ 35.0 $ 46.9 Other comprehensive (loss) income, before tax: Foreign currency translation adjustments ( 0.2 ) 6.5 Unrealized gains on derivatives: Unrealized holding gains arising during period 2.6 2.2 Less: reclassification adjustment for gains included in net income ( 2.4 ) ( 0.5 ) Unrealized gains on derivatives 0.2 1.7 Defined benefit plans: Net actuarial gains arising during period — 0.1 Defined benefit plans — 0.1 Other comprehensive income, before tax — 8.3 Income tax expense related to items of other comprehensive income — — Other comprehensive income, net of tax — 8.3 COMPREHENSIVE INCOME $ 35.0 $ 55.2 See notes to consolidated financial statements. 2 Table of Contents MasterBrand, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (U.S. Dollars presented in millions) March 26, 2023 December 25, 2022 ASSETS Current assets Cash and cash equivalents $ 116.3 $ 101.1 Accounts receivable (net of allowances for credit losses of $ 8.5 and $ 11.6 , respectively) 278.3 289.6 Inventories 349.6 373.1 Other current assets 66.4 66.2 TOTAL CURRENT ASSETS 810.6 830.0 Property, plant and equipment, net of accumulated depreciation 344.0 352.6 Operating lease right-of-use assets, net of accumulated amortization 62.8 52.3 Goodwill 923.8 924.2 Other intangible assets, net of accumulated amortization 345.3 349.8 Other assets 21.6 20.5 TOTAL ASSETS $ 2,508.1 $ 2,529.4 LIABILITIES AND EQUITY Current liabilities Accounts payable $ 202.8 $ 219.2 Current portion of long-term debt 22.2 17.5 Current operating lease liabilities 14.4 13.9 Other current liabilities 149.4 160.5 TOTAL CURRENT LIABILITIES 388.8 411.1 Long-term debt 917.4 961.5 Deferred income taxes 84.4 87.3 Pension and other postretirement plan liabilities 12.2 12.2 Operating lease liabilities 50.6 40.7 Other non-current liabilities 8.3 7.4 TOTAL LIABILITIES 1,461.7 1,520.2 Commitments and Contingencies (Note 13) Equity Common stock (par value $ 0.01 per share; authorized 750.0 million shares; issued 128.8 million shares and outstanding 128.5 million shares as of March 26, 2023; issued and outstanding 128.0 million shares as of December 25, 2022) 1.3 1.3 Paid-in capital 4.9 — Treasury stock, at cost ( 2.8 ) ( 0.1 ) Accumulated other comprehensive loss ( 14.5 ) ( 14.5 ) Retained earnings 1,057.5 1,022.5 TOTAL EQUITY 1,046.4 1,009.2 TOTAL LIABILITIES AND EQUITY $ 2,508.1 $ 2,529.4 See notes to consolidated financial statements. 3 Table of Contents MasterBrand, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 13 Weeks Ended (U.S. Dollars presented in millions) March 26, 2023 March 27, 2022 OPERATING ACTIVITIES Net income $ 35.0 $ 46.9 Non-cash expense (income): Depreciation 11.3 10.8 Amortization of intangibles 4.0 4.4 Restructuring adjustments, net of cash payments ( 10.4 ) ( 0.6 ) Amortization of finance fees 0.5 — Stock-based compensation 4.9 2.7 Changes in operating assets and liabilities: Accounts receivable 14.1 ( 18.3 ) Inventories 23.3 ( 32.8 ) Other current assets ( 2.0 ) ( 8.6 ) Accounts payable ( 16.9 ) 14.9 Accrued expenses and other current liabilities ( 14.6 ) ( 17.5 ) Other items 12.9 ( 4.8 ) NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 62.1 ( 2.9 ) INVESTING ACTIVITIES Capital expenditures (a) ( 2.9 ) ( 11.0 ) Proceeds from the disposition of assets 0.2 — NET CASH USED IN INVESTING ACTIVITIES ( 2.7 ) ( 11.0 ) FINANCING ACTIVITIES Issuance of long-term and short-term debt 40.0 — Reductions of long-term and short-term debt ( 79.6 ) — Related party borrowings — 727.7 Related party repayments — ( 744.8 ) Net contributions from Fortune Brands — 28.3 Payments of employee taxes withheld from share-based awards ( 2.8 ) — Repayment of finance lease facilities ( 0.3 ) ( 0.2 ) NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES ( 42.7 ) 11.0 Effect of foreign exchange rate changes on cash and cash equivalents ( 1.5 ) 0.4 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 15.2 $ ( 2.5 ) Cash and cash equivalents at beginning of period $ 101.1 $ 141.4 Cash and cash equivalents at end of period $ 116.3 $ 138.9 (a) Capital expenditures of $ 2.0 million and $ 2.8 million that have not been paid as of March 26, 2023 and March 27, 2022, respectively, were excluded from the condensed consolidated statement of cash flows. See notes to consolidated financial statements. 4 Table of Contents MasterBrand, Inc. CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) Common Stock (U.S. Dollars and shares presented in millions) Shares Amount Paid-in Capital Treasury stock, at cost Accumulated Other Comprehensive (Loss) Income Retained Earnings Total Equity Balance at December 26, 2021 — $ — $ 272.2 $ — $ ( 3.9 ) $ 2,185.5 $ 2,453.8 Comprehensive income: Net income — — — — — 46.9 46.9 Other comprehensive income — — — — 8.3 — 8.3 Stock-based compensation — — 2.7 — — — 2.7 Net contributions from Fortune Brands — — 28.3 — — — 28.3 Balance at March 27, 2022 — $ — $ 303.2 $ — $ 4.4 $ 2,232.4 $ 2,540.0 Balance at December 25, 2022 128.0 $ 1.3 $ — $ ( 0.1 ) $ ( 14.5 ) $ 1,022.5 $ 1,009.2 Comprehensive income: Net income — — — — — 35.0 35.0 Other comprehensive income — — — — — — — Stock-based compensation 0.5 — 4.9 ( 2.7 ) — — 2.2 Balance at March 26, 2023 128.5 $ 1.3 $ 4.9 $ ( 2.8 ) $ ( 14.5 ) $ 1,057.5 $ 1,046.4 See notes to consolidated financial statements. 5 Table of Contents MasterBrand, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation and Principles of Consolidation Background MasterBrand, Inc. is a leading manufacturer of residential cabinets in North America with a portfolio of leading residential cabinetry products for the kitchen, bathroom and other parts of the home. References to “Cabinets,” “MasterBrand,” “the Company,” “we,” “our” and “us” refer to MasterBrand, Inc. and its consolidated subsidiaries, unless the context otherwise requires. On April 28, 2022, Fortune Brands Home & Security, Inc. (“Fortune Brands” or the “Parent”) announced that its Board of Directors approved in principle a separation of its Cabinets segment into a standalone publicly-traded company (the “Separation”). The Cabinets segment of Fortune Brands had historically been operated by MasterBrand Cabinets, Inc. (“MBCI”). In July 2022, Fortune Brands incorporated MasterBrand, Inc. in the State of Delaware and subscribed to all of the shares of MasterBrand, Inc.’s common stock upon its incorporation. Following the incorporation of MasterBrand, Inc., the following occurred: (1) Fortune Brands contributed all of the issued and outstanding shares of capital stock of MBCI to MasterBrand, Inc., resulting in MBCI becoming a wholly-owned subsidiary of MasterBrand, Inc. through a transaction between entities under common control; and (2) MBCI was converted into a Delaware limited liability company, MasterBrand Cabinets LLC (collectively, the “Reorganization”). On December 14, 2022, the Separation was completed by way of a pro rata dividend of our common stock to stockholders of Fortune Brands common stock (the “Distribution”). On December 14, 2022, the date of Separation, 128.0 million shares of MasterBrand, Inc. common stock were issued. Fortune Brand shareholders received one share of MasterBrand, Inc. common stock for each share of Fortune Brands common stock held on the record date. Following the Distribution, Fortune Brands stockholders owned 100 percent of the shares of MasterBrand, Inc. common stock, and MasterBrand, Inc. became an independent, publicly-traded company, listed under the symbol “MBC” on the New York Stock Exchange beginning December 15, 2022. All share and per share amounts for all prior periods presented in the condensed consolidated financial statements, including Note 4, “Earnings Per Share,” have been retroactively recast to reflect the effects of the changes in equity structure resulting from the Reorganization, Separation and Distribution. The historical activity of the Company is that of MBCI prior to the Reorganization. The Company’s equity structure prior to the Separation and Distribution included 5,000 shares of MasterBrand, Inc. common stock authorized and 100 shares issued. Prior to the incorporation of MasterBrand, Inc. in July 2022, the equity structure of MBCI included 1,000 authorized and issued shares of common stock. MasterBrand, Inc. is the registrant and the financial reporting entity following the consummation of the Separation and Distribution. In order to govern the ongoing relationships between MasterBrand, Inc. and Fortune Brands after the Separation and to facilitate an orderly transition, the parties entered into a series of agreements, including the following: • Separation and Distribution Agreement – sets forth the principal actions to be taken in connection with the Separation, including the transfer of assets and assumption of liabilities, among others, and sets forth other agreements governing aspects of the relationship between MasterBrand and Fortune Brands. • Transition Services Agreement – allows for Fortune Brands and MasterBrand to provide certain transition services to each other for a limited time, up to 24 months following the Separation. • Tax Allocation Agreement – governs the respective rights, responsibilities and obligations of MasterBrand and Fortune Brands with respect to tax liabilities and benefits, tax attributes, tax contests and other matters regarding income taxes, non-income taxes and related tax returns. • Employee Matters Agreement – addresses certain employment, compensation and benefits matters, including the allocation and treatment of certain assets and liabilities relating to MasterBrand employees. 6 Table of Contents Basis of Presentation The accompanying financial statements are now presented on a consolidated basis as the company is a standalone public company. We have historically existed and functioned as a reporting segment of the consolidated business of Fortune Brands up until the Separation on December 14, 2022, at which time we became a standalone public company. Certain information from prior to the Separation on December 14, 2022 was derived from Fortune Brands’ consolidated financial statements and accounting records. The condensed consolidated financial statements and notes to condensed consolidated financial statements as of and subsequent to December 14, 2022, the date of the Separation, reflect the consolidated financial position, results of operations and cash flows for MasterBrand as an independent company. Prior to the Separation, the condensed consolidated financial statements and notes to condensed consolidated financial statements were prepared on a carve-out basis using the financial statements and accounting records of Fortune Brands. The carve-out basis financial statements represent the historical financial position, results of operations, and cash flows of MasterBrand as they were historically managed in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reflect significant assumptions and allocations. The carve-out financial statements may not include all expenses that would have been incurred had MasterBrand existed as a standalone entity. Our consolidated financial statements are based on a 52- or 53-week fiscal year ending on the last Sunday in December in each calendar year. Our fiscal 2023 will consist of 53 weeks ending on December 31, 2023, while our fiscal 2022 consisted of 52 weeks ended on December 25, 2022. The condensed consolidated balance sheet as of the thirteen weeks ended March 26, 2023, as well as the related condensed consolidated statements of income, comprehensive income, cash flows, and equity for the thirteen weeks ended March 26, 2023 and the thirteen weeks ended March 27, 2022 are unaudited. The presentation of these financial statements requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. In the opinion of management, all adjustments necessary for a fair statement of the financial statements have been included. Interim results may not be indicative of results for a full year. The condensed consolidated financial statements and notes are presented pursuant to the rules and regulations of the Securities and Exchange Commission and do not contain certain information included in our audited consolidated financial statements and notes. The 2022 condensed consolidated balance sheet was derived from our audited consolidated financial statements, but does not include all disclosures required by GAAP. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 25, 2022. The condensed consolidated statements of income include all revenues and costs directly attributable to our business, including costs for facilities, functions, and services we utilize. The condensed consolidated statements of income also include an allocation of expenses related to certain Fortune Brands corporate functions through the Separation, including information technology, finance, executive, human resources, supply chain, internal audit, governance and legal services. These expenses have been allocated based on direct usage or benefit where specifically identifiable, with the remainder allocated on a proportional cost allocation method based primarily on net sales, employee headcount, or number of facilities, as applicable. Prior to the Separation, total expenses allocated for the thirteen weeks ended March 27, 2022 were $ 20.1 million, of which $ 12.1 million was not previously allocated to us. Such amounts are primarily included within selling, general and administrative expenses in the condensed consolidated statements of income. We consider the expense methodology and resulting allocation to be reasonable; however, the allocations may not be indicative of actual expenses that would have been incurred had we operated as an independent, publicly-traded company in the prior period presented. Actual costs that we may have incurred during the time period we were not a standalone company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by our employees and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology and infrastructure. Accordingly, historical allocations may not be indicative of future costs we incur operating as an independent, publicly-traded company. The condensed consolidated statements of income also include $ 1.6 million of costs related to the separation from Fortune Brands for the thirteen week period ended March 26, 2023. There were no such costs incurred during the thirteen weeks ended March 27, 2022. The Separation-related costs include advisory fees, professional fees and other transaction related costs incurred directly by us. These costs are included within selling, general and administrative expenses. 7 Table of Contents The income tax amounts in the condensed consolidated financial statements have been calculated on a separate-return method and presented as if our operations were separate taxpayers in the respective jurisdictions. For the period prior to the Separation in 2022, including the Separation, federal and state income tax payments and refunds were paid and received by Fortune Brands on our behalf. The net taxes paid on our behalf are payable to Fortune Brands, as provided in the indemnification provisions of the Tax Allocation Agreement. Accordingly, the net tax payable of $ 32.6 million to Fortune Brands at both March 26, 2023 and December 25, 2022, is recorded in accounts payable on the condensed consolidated balance sheets. Following the Separation, a limited number of services that Fortune Brands provided to us, or we provided to them, prior to the Separation are continuing to be provided for a period of time under a Transition Services Agreement. We are now incurring certain costs as a standalone public company, including services provided by our own resources or through third-party service providers relating to corporate functions, including information technology, finance, executive, human resources, supply chain, internal audit, governance and legal services, as well as ongoing additional costs associated with operating as an independent, publicly-traded company. For more information regarding related party transactions with Fortune Brands, see Note 15, “Related Party Transactions.” Fortune Brands utilized a central approach to treasury management, and prior to Separation, we historically participated in related cash pooling arrangements prior to the Separation. Our cash and cash equivalents on our condensed consolidated balance sheets represent cash balances held in bank accounts owned by the Company and its subsidiaries. Prior to the Separation, we had no third-party borrowings, and all borrowings attributable to our business and due to Fortune Brands were recorded as “related party payable” in our consolidated balance sheets and classified as current or noncurrent based on loan maturity dates. Fortune Brands’ third-party debt and related interest expense were not attributed to us as we were not the legal obligor of the debt, and the borrowings were not specifically identifiable to us. However, in connection with the Separation, we completed a financing transaction, which resulted in additional interest expense beginning in the fourth quarter of 2022. See Note 9, “Debt” for additional information. During the fourth quarter of 2022, we recognized $ 8.7 million of additional expense in cost of goods sold as an out-of-period adjustment. This adjustment was to correct errors for expenses that should have been recognized of $ 5.1 million, $ 1.6 million and $ 2.0 million in the thirteen weeks ended March 27, 2022, June 26, 2022 and September 25, 2022, respectively. The adjustment did not have any impact on our annual consolidated financial statements for the fiscal year ended December 25, 2022. Tornado at Jackson, GA Production Facility On January 12, 2023, a tornado hit the Company’s leased Jackson, Georgia production facility, causing damage to the Company’s assets and disrupting certain operations. Insurance, less applicable deductibles, covers the repair or replacement of the Company’s assets that suffered loss or damage, and the Company is working closely with its insurance carriers and claims adjusters to ascertain the full amount of insurance proceeds due to the Company as a result of the damages and the loss the Company suffered. The Company’s insurance policies also provide business interruption coverage, including lost profits, and reimbursement for other expenses and costs that have been incurred relating to the damages and losses suffered. In the first quarter of 2023, the Company incurred expenses of $ 9.4 million solely related to damages caused by the tornado. These expenses include compensation costs that we continued to pay skilled labor at the Jackson facility to enable a timely ramp up of production upon re-opening the facility on March 27, 2023, the first day of our fiscal second quarter of 2023, as well as the write-off of damaged inventory, freight costs to move product to other warehouses and professional fees to secure and maintain the site. These amounts were recorded as a component of cost of products sold in the condensed consolidated statements of income for the period ended March 26, 2023. At this time, the full amount of combined inventory damage and business interruption costs and recoveries cannot be estimated, and accordingly, no additional amounts, including amounts for insurance recoveries, have been recorded as of March 26, 2023. 8 Table of Contents 2. Recently Issued Accounting Standards Accounting Standards Issued and Adopted There are no recently issued accounting pronouncements that we have adopted and which have had a material effect on our results of operations, cash flows or financial condition. Accounting Standards Issued, But Not Yet Adopted There are no recently issued accounting pronouncements that we have not yet adopted that are expected to have a material effect on our results of operations, cash flows or financial condition. 3. Revenue from Contracts with Customers Our principal performance obligations are the sale of high quality stock, semi-custom and premium cabinetry, as well as vanities, for the kitchen, bath and other parts of the home (collectively, “goods” or “products”). We recognize revenue for the sale of goods based on our assessment of when control transfers to our customers. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods to our customers. Payment terms on our product sales normally range from 30 to 90 days. Taxes assessed by a governmental authority that we collect are excluded from revenue. The expected costs associated with our contractual warranties are recognized as expense when the products are sold. See Note 13, “Contingencies and Accrued Product Warranties” for further discussion. We record estimates to reduce revenue for customer programs and incentives, which are considered variable consideration, and include price discounts, volume-based incentives, promotions and cooperative advertising when revenue is recognized in order to determine the amount of consideration the Company will ultimately be entitled to receive. These estimates are based on historical and projected experience for each type of customer. In addition, for certain customer program incentives, we receive an identifiable benefit (goods or services) in exchange for the consideration given and record the associated expenditure in selling, general and administrative expenses. We account for shipping and handling costs that occur after the customer has obtained control of a product as a fulfillment activity (i.e., as an expense) rather than as a promised service (i.e., as a revenue element). These costs are classified within selling, general and administrative expenses. Settlement of our outstanding accounts receivable balances normally occurs within 30 to 90 days of the original sale transaction date. Obligations arise for us from customer rights to return our goods for any reason, including among others, product obsolescence, stock rotations, trade-in agreements for newer products and upon termination of a customer contract. We estimate future product returns at the time of sale based on historical experience and record a corresponding refund obligation, which amounted to $ 2.4 million and $ 3.0 million as of March 26, 2023 and December 25, 2022, respectively. Refund obligations are classified within other current liabilities in our condensed consolidated balance sheet. Return assets related to the refund obligation are measured at the carrying amount of the goods at the time of sale, less any expected costs to recover the goods and any expected reduction in value. The Company disaggregates revenue from contracts with customers into (i) major sales distribution channels in the U.S. and (ii) total sales to customers outside the U.S. market, as these categories depict the nature, amount, timing and uncertainty of revenues and cash flows that are affected by economic factors. The following table disaggregates our consolidated revenue by major sales distribution channels for 2023 and 2022. 13 Weeks Ended (In millions) March 26, 2023 March 27, 2022 Dealers (a) $ 329.0 $ 379.6 Retailers (b) 242.9 281.5 Builders (c) 71.4 72.2 U.S. net sales 643.3 733.3 International (d) 33.4 43.8 Net sales $ 676.7 $ 777.1 9 Table of Contents a) Represents sales to domestic dealers whose end customers include builders, professional trades and home remodelers, inclusive of sales through our dealers’ respective internet website portals. b) Represents sales to domestic “Do-It-Yourself” retailers, including our two largest customers: 1) The Home Depot, Inc., and 2) Lowe’s Companies, Inc., inclusive of sales through their respective internet website portals. c) Represents sales directly to domestic builders. d) Represents sales in markets outside the United States, principally in Canada and Mexico. Practical Expedients Incremental costs of obtaining a contract include only those costs the Company incurs that would not have been incurred if the contract had not been obtained. These costs are required to be recognized as assets and amortized over the period that the related goods or services transfer to the customer. As a practical expedient, we expense as incurred costs to obtain a contract when the expected amortization period is one year or less. These costs are recorded within selling, general and administrative expenses in the accompanying condensed consolidated statements of income. Allowance for Credit Losses Our primary allowance for credit losses is the allowance for doubtful accounts. The allowance for doubtful accounts reduces the trade accounts receivable balance to the estimated net realizable value equal to the amount that is expected to be collected. The allowance is based on assessments of current creditworthiness of customers, historical collection experience, the aging of receivables and other currently available evidence. Trade accounts receivable balances are written-off against the allowance if a final determination of uncollectibility is made. All provisions for allowances for doubtful collection of accounts are included in selling, general and administrative expenses. The following table summarizes the activity for the thirteen week periods ended March 26, 2023 and March 27, 2022: 13 Weeks Ended: (In millions) March 26, 2023 March 27, 2022 Beginning balance $ 11.6 $ 2.5 Bad debt provision 0.4 1.6 Uncollectible accounts written off, net of recoveries ( 3.5 ) ( 0.8 ) Ending balance $ 8.5 $ 3.3 4. Earnings Per Share On December 14, 2022, 128.0 million MasterBrand common shares were distributed to Fortune Brands’ shareholders in conjunction with the Separation. For comparative purposes, the thirteen weeks ended March 27, 2022 have been retroactively recast to reflect the effects of the changes in equity structure resulting from the Reorganization, Separation and Distribution and assume the same basic weighted average shares. For the thirteen weeks ended March 26, 2023, diluted earnings per share is computed by giving effect to all potentially dilutive stock awards that are outstanding. For the thirteen weeks ended March 27, 2022, which was prior to the Separation, it is assumed that there are no dilutive securities as there were no stock-based awards of MasterBrand, Inc. outstanding. The following table sets forth the reconciliation of the numerator and the denominator of basic earnings per share and diluted earnings per share for the thirteen weeks ended March 26, 2023 and March 27, 2022: 10 Table of Contents 13 Weeks Ended: (In millions, except per share amounts) March 26, 2023 March 27, 2022 Numerator: Numerator for basic and diluted earnings per share - Net income $ 35.0 $ 46.9 Denominator: Denominator for basic earnings per share - weighted average shares outstanding 128.2 128.0 Effect of dilutive securities - stock-based awards 1.3 — Denominator for diluted earnings per share - weighted average shares outstanding 129.5 128.0 Earnings per share: Basic $ 0.27 $ 0.37 Diluted $ 0.27 $ 0.37 Approximately 2.4 million shares are excluded from the calculation of diluted earnings per share for the thirteen weeks ended March 26, 2023, because their inclusion would have been anti-dilutive. 5. Balance Sheet Information Supplemental information on our balance sheets is as follows: (In millions) March 26, 2023 December 25, 2022 Inventories: Raw materials and supplies $ 256.1 $ 292.1 Work in process 26.0 23.6 Finished products 67.5 57.4 Total inventories $ 349.6 $ 373.1 Property, plant and equipment: Land and improvements $ 32.5 $ 32.9 Buildings and improvements to leaseholds 304.8 304.0 Machinery and equipment 525.2 518.8 Construction in progress 30.9 37.7 Property, plant and equipment, gross 893.4 893.4 Less: accumulated depreciation 549.4 540.8 Property, plant and equipment, net of accumulated depreciation $ 344.0 $ 352.6 Accounts payable: Third party $ 159.3 $ 175.1 Fortune Brands (a) 43.5 44.1 Total accounts payable $ 202.8 $ 219.2 Other current liabilities: Accrued salaries, wages and other compensation $ 33.9 $ 49.0 Accrued restructuring 5.0 15.4 Accrued taxes 28.9 14.3 Accrued product warranties 12.2 11.2 Other accrued expenses 69.4 70.6 Total other current liabilities $ 149.4 $ 160.5 (a) The payable to Fortune Brands of $ 43.5 million and $ 44.1 million as of March 26, 2023 and December 25, 2022, respectively, represents various items Fortune Brands paid on our behalf, for which we owe reimbursement, including income taxes incurred prior to the Separation of $ 32.6 million. 11 Table of Contents 6. Goodwill and Identifiable Intangible Assets We had goodwill of $ 923.8 million and $ 924.2 million as of March 26, 2023 and December 25, 2022, respectively. The change in the net carrying amount of goodwill was as follows: (In millions) Total Goodwill Balance at December 25, 2022 $ 924.2 2023 translation adjustments ( 0.4 ) Balance at March 26, 2023 $ 923.8 The gross carrying value and accumulated amortization by class of intangible assets as of March 26, 2023 and December 25, 2022 were as follows: As of March 26, 2023 As of December 25, 2022 (In millions) Gross Carrying Amounts Accumulated Amortization Net Book Value Gross Carrying Amounts Accumulated Amortization Net Book Value Indefinite-lived tradenames $ 182.6 $ — $ 182.6 $ 183.1 $ — $ 183.1 Amortizable intangible assets Tradenames 10.2 ( 10.1 ) 0.1 10.3 ( 10.2 ) 0.1 Customer and contractual relationships 362.5 ( 200.1 ) 162.4 362.9 ( 196.8 ) 166.1 Patents/proprietary technology 11.0 ( 10.8 ) 0.2 11.0 ( 10.5 ) 0.5 Total 383.7 ( 221.0 ) 162.7 384.2 ( 217.5 ) 166.7 Total identifiable intangibles $ 566.3 $ ( 221.0 ) $ 345.3 $ 567.3 $ ( 217.5 ) $ 349.8 There were no impairments of goodwill or indefinite-lived assets for the thirteen week periods ended March 26, 2023 and March 27, 2022. The Company tests goodwill and indefinite-lived intangibles for impairment annually in the fourth quarter or more frequently if events or changes in circumstances indicate the asset might be impaired. There were no triggering events requiring an impairment assessment be conducted in the thirteen weeks ended March 26, 2023. However, it is possible that future changes in circumstances would require the Company to record additional non-cash impairment charges. In the second quarter of 2022, subsequent to the balance sheet date, we recognized an impairment charge of $ 26.0 million related to an indefinite-lived tradename. During the second quarter of 2022, production was shifted within our manufacturing footprint to enable what we expect to be a higher value purpose and growth opportunity, which led to downward revisions to forecasted revenue growth rates associated with the tradename. In the fourth quarter of 2022, we recognized an impairment charge of $ 12.8 million related to the same indefinite-lived tradename as a result of further shifts within our product portfolio to better align with forecasted future customer demand as a result of a significant decrease in sales during the fourth quarter of 2022, driven by continued and persistent inflation, as well as elevated interest rates and economic uncertainty. These downward revisions to forecasted revenue growth were not known when recording the impairment charge during the second quarter of 2022. As of both March 26, 2023 and December 25, 2022, the carrying value of this tradename was $ 46.2 million. In the fourth quarter of 2022, we recognized an impairment charge of $ 7.6 million to a second indefinite-lived tradename. This was primarily due to a shift in customer demand from this tradename to a lower price point product, as a result of continued and persistent inflation as well as elevated interest rates and economic uncertainty. As of both March 26, 2023 and December 25, 2022, the carrying value of this tradename was $ 19.1 million. 12 Table of Contents 7. Financial Instruments We do not enter into financial instruments for trading or speculative purposes. We principally use financial instruments to reduce the impact of changes in foreign currency exchange rates. The principal derivative financial instruments we enter into on a routine basis are foreign exchange contracts. Derivative financial instruments are recorded at fair value. The counterparties to derivative contracts are major financial institutions. We are subject to credit risk on these contracts equal to the fair value of these instruments. Management currently believes that the risk of incurring material losses is unlikely and that the losses, if any, would be immaterial to the Company. We account for derivative instruments as follows: • Derivative instruments that are designated as fair value hedges - The gain or loss on the derivative instrument, as well as the offsetting loss or gain on the hedged item, are recognized on the same line of the condensed consolidated statements of income. • Derivative instruments that are designated as cash flow hedges - The changes in the fair value of the derivative instrument are reported in other comprehensive income and are recognized in the condensed consolidated statements of income when the hedged item affects earnings. • Derivative instruments that are designated as net investment hedges - The changes in fair value of the derivative instrument are recognized in the condensed consolidated statements of income when realized upon sale or upon complete or substantially complete liquidation of the investment in the foreign entity. As of and for the thirteen week periods ending March 26, 2023 and March 27, 2022, we have only entered into foreign currency forward contracts, some of which have been designated as fair value hedges and some of which have been designated as cash flow hedges. We may enter into foreign currency forward contracts to protect against foreign exchange risks associated with certain existing assets and liabilities, forecasted future cash flows, and net investments in foreign subsidiaries. Foreign exchange contracts related to forecasted future cash flows correspond to the periods of the forecasted transactions, which generally do not exceed 12 to 15 months subsequent to the latest balance sheet date. Our primary foreign currency hedge contracts pertain to the Mexican peso and the Canadian dollar. The gross U.S. dollar equivalent notional amount of all foreign currency derivative hedges outstanding at March 26, 2023 was $ 86.3 million , representing a net settlement asset of $ 3.9 million. Based on foreign exchange rates as of March 26, 2023 , we estimate that $ 3.1 million of net derivative gains associated with cash flow hedges and included in accumulated other comprehensive inco me as of March 26, 2023 will be reclassified to earnings within the next twelve months. The fair values of foreign exchange derivative instruments on the condensed consolidated balance sheets as of March 26, 2023 and December 25, 2022 were: (In millions) Location March 26, 2023 December 25, 2022 Assets: Foreign exchange contracts Other current assets $ 4.0 $ 3.7 Total assets $ 4.0 $ 3.7 Liabilities: Foreign exchange contracts Other current liabilities $ 0.1 $ 0.5 Total liabilities $ 0.1 $ 0.5 13 Table of Contents The effects of derivative financial instruments on the condensed consolidated statements of income for the thirteen weeks ended March 26, 2023 and March 27, 2022 were: Classification and Amount Recognized in Income on Fair Value and Cash Flow Hedging Relationships 13 weeks ended March 26, 2023 (In millions) Cost of products sold Other expense, net Total amounts per Condensed Consolidated Statements of Income $ 472.1 $ 0.4 The effects of fair value and cash flow hedging: Loss (gain) on fair value hedging relationships Foreign exchange contracts: Hedged items — ( 1.1 ) Derivative designated as hedging instruments — 2.5 (Gain) on cash flow hedging relationships Foreign exchange contracts: Amount of (gain) reclassified from accumulated other comprehensive loss into income ( 2.4 ) — Classification and Amount Recognized in Income on Fair Value and Cash Flow Hedging Relationships 13 weeks ended March 27, 2022 (In millions) Cost of products sold Other expense, net Total amounts per Condensed Consolidated Statements of Income $ 566.1 $ 0.9 The effects of fair value and cash flow hedging: Loss (gain) on fair value hedging relationships Foreign exchange contracts: Hedged items — ( 0.9 ) Derivative designated as hedging instruments — 1.6 (Gain) on cash flow hedging relationships Foreign exchange contracts: Amount of (gain) reclassified from accumulated other comprehensive loss into income ( 0.5 ) — The cash flow hedges recognized in other comprehensive income during the thirteen weeks ended March 26, 2023 and March 27, 2022 were net gains of $ 2.6 million and $ 2.2 million, respectively. 8. Fair Value Measurements ASC requirements for Fair Value Measurements and Disclosures establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels. Level 1 inputs, the highest priority, are quoted prices in active markets for identical assets or liabilities. Level 2 inputs reflect other than quoted prices included in Level 1 that are either observable directly or through corroboration with observable market data. Level 3 inputs are unobservable inputs due to little or no market activity for the asset or liability, such as internally-developed valuation models. We do not have any assets or liabilities measured at fair value on a recurring basis that are Level 3, except for certain assumptions in estimating the fair value of indefinite-lived tradenames, as discussed in Note 8, “Goodwill and Identifiable Intangible Assets” in our Annual Report on Form 10-K. 14 Table of Contents Assets and liabilities measured at fair value on a recurring basis as of March 26, 2023 and December 25, 2022 were as follows: (In millions) Fair Value March 26, 2023 December 25, 2022 Assets: Derivative asset financial instruments (Level 2) $ 4.0 $ 3.7 Deferred compensation program assets (Level 2) 4.5 3.6 Total assets $ 8.5 $ 7.3 Liabilities: Derivative liability financial instruments (Level 2) $ 0.1 $ 0.5 The principal derivative financial instruments we enter into on a routine basis are foreign exchange contracts. Derivative financial instruments are recorded at fair value. 9. Debt The following table provides a summary of the Company’s debt as of March 26, 2023 and December 25, 2022, including the carrying value of the debt less debt issuance costs: (In millions) March 26, 2023 December 25, 2022 Current Long-term Current Long-term Revolving credit facility due November 2027 $ — $ 200.0 $ — $ 235.0 Term loan due November 2027 23.4 721.9 18.8 731.3 23.4 921.9 18.8 966.3 Less: Unamortized debt issuance costs ( 1.2 ) ( 4.5 ) ( 1.3 ) ( 4.8 ) Total $ 22.2 $ 917.4 $ 17.5 $ 961.5 On November 18, 2022, the Company 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”). Initial proceeds from the credit agreement were received at the time of Separation from Fortune Brands and were used to fund the dividend paid to Fortune Brands, with any future proceeds to be used for general corporate purposes. The credit agreement is secured by certain assets as well as the guarantee of certain of our subsidiaries. Total amounts outstanding under the Term Loan and Revolving Credit Facility as of March 26, 2023 were $ 745.3 million and $ 200.0 million, respectively. Total amounts outstanding under the Term Loan and Revolving Credit Facility as of December 25, 2022 were $ 750.0 million and $ 235.0 million, respectively. The $ 750.0 million Term Loan has quarterly required amortization payments beginning in March 2023, and our first payment of $ 4.7 million was made prior to March 26, 2023. Interest rates under these facilities are variable based on the Secured Overnight Financing Rate (“SOFR”) at the time of the borrowing, and the Company’s net leverage ratio as measured by Net Leverage to our consolidated earnings before interest, taxes, depreciation and amortization (“Consolidated EBITDA”). Interest rates can range from SOFR plus 1.85 percent to SOFR plus 2.60 percent. Net Leverage is defined as consolidated total indebtedness minus certain cash and cash equivalents. Consolidated EBITDA is defined as consolidated net income before interest expense, income taxes, depreciation, amortization of intangible assets, losses from asset impairments, and certain other one-time adjustments. The Net Leverage Ratio may not exceed 3.875 to 1.0 at the initial borrowing through the second fiscal quarter of 2023, adjusting downward in various future quarters before settling at 3.25 to 1.0 in January 2025. The Company also is required to maintain a minimum Interest Coverage Ratio, defined as Consolidated EBITDA to consolidated interest expense, of 3.0 to 1.0. 15 Table of Contents The Company’s 2022 Credit Agreement contains additional covenants which limit or preclude certain corporate actions based upon the measurement of certain financial covenant metrics. The Company was in compliance with all of its debt covenants as of March 26, 2023 and December 25, 2022. Interest paid on debt was $ 17.4 million for the thirteen weeks ended March 26, 2023. During the fourth quarter of 2022, we incurred indebtedness in connection with the Separation and Distribution, which resulted in interest expense in the first quarter of 2023. Prior to the Separation, we had no third-party borrowings. We did not record any material capitalized interest during the thirteen weeks ended March 26, 2023 or March 27, 2022. 10. Restructuring Adjustments We recognized $ 0.4 million of adjustments to our restructuring liability during the thirteen week period ended March 26, 2023. There were no restructuring charges during the thirteen week period ended March 27, 2022. Reconciliation of Restructuring Liability (In millions) Balance at December 25, 2022 (Adjustments) Provision Cash Expenditures (a) Balance at March 26, 2023 Workforce reduction costs $ 15.3 $ ( 1.1 ) $ ( 9.3 ) $ 4.9 Other $ 0.1 $ 0.7 $ ( 0.7 ) $ 0.1 $ 15.4 $ ( 0.4 ) $ ( 10.0 ) $ 5.0 a) Cash expenditures primarily related to severance charges. (In millions) Balance at December 26, 2021 Provision Cash Expenditures (a) Balance at March 27, 2022 Workforce reduction costs $ 2.2 $ — $ ( 0.6 ) $ 1.6 Other 0.2 — — 0.2 $ 2.4 $ — $ ( 0.6 ) $ 1.8 a) Cash expenditures primarily related to severance charges. 11. Income Taxes Subsequent to the Separation, as a stand-alone entity, we will file consolidated U.S. federal income tax returns and various state and local income tax returns. The Company’s foreign income tax returns will continue to be filed on a full-year basis. The Company’s deferred taxes and effective tax rate may differ from those in the pre-Separation taxable periods. The effective income tax rates for the thirteen weeks ended March 26, 2023, and March 27, 2022, were 26.9 percent and 24.0 percent, respectively. The change in the effective tax rate between the periods resulted primarily due to the change in projected earnings mix by geography and tax jurisdiction as compared to the prior period, changes in state and local income taxes, nondeductible compensation, and recognition of deferred tax liability for foreign earnings in 2023. The difference between the Company’s effective income tax rate for the thirteen weeks ended March 26, 2023, and the U.S. statutory rate of 21.0 percent primarily relates to changes in state and local income taxes, nondeductible compensation, foreign income inclusions with offsetting foreign tax credits, changes due to foreign tax return filings, recognition of a deferred tax liability for foreign earnings and the mix of earnings in jurisdictions with differing tax rates. The difference between the Company’s effective income tax rate for the thirteen weeks ended March 27, 2022, and the U.S. statutory rate of 21.0 percent primarily relates to changes in state and local income taxes, nondeductible compensation, and tax benefits from general business credits. 16 Table of Contents The Company is subject to ongoing tax authority examinations in various jurisdictions in which it operates. Liabilities related to uncertain tax benefits (“UTBs”), including interest and penalties, are reported as a liability within the condensed consolidated balance sheets. The Company regularly assesses the likelihood of an adverse outcome resulting from examinations to determine the adequacy of its tax reserves. The Company classifies interest and penalty accruals related to UTBs as income tax expense. As of March 26, 2023, the Company recognized interest and penalty expense of approximately $ 0.1 million. The amount of UTBs that, if recognized as of March 26, 2023, would affect the Company’s effective tax rate is $ 1.2 million. It is reasonably possible that, within the next twelve months, total UTBs may decrease in the range of $ 0.3 million to $ 1.2 million primarily as a result of the conclusion of U.S. federal, state, and foreign income tax proceedings or expiration of the relevant statute of limitations. As of March 26, 2023, the Company is not permanently reinvested with respect to all earnings generated by foreign operations. 12. Pension and Other Postretirement Plans The components of net periodic (benefit) cost for pension and other postretirement plans for the thirteen weeks ended March 26, 2023 and March 27, 2022 were as set forth in the table below. Service cost is classified as either a component of cost of products sold or within selling, general and administrative expenses in the condensed consolidated statements of income, based on the nature of the job responsibilities of the associates participating in the plans. All other components of net periodic (benefit) cost are classified as other expense, net in the condensed consolidated statements of income. Pension Benefits Postretirement Benefits 13 Weeks Ended 13 Weeks Ended (In millions) March 26, 2023 March 27, 2022 March 26, 2023 March 27, 2022 Service cost $ — $ — $ 0.1 $ 0.1 Interest cost 1.6 1.2 0.1 0.1 Expected return on plan assets ( 1.8 ) ( 1.8 ) — — Net periodic (benefit) cost ( 0.2 ) ( 0.6 ) 0.2 0.2 13. Contingencies and Accrued Product Warranties Product Warranties We generally record warranty expense related to contractual warranty terms at the time of sale. We may also provide customer concessions for claims made outside of the contractual warranty terms and those expenses are recorded in the period in which the concession is made. We offer our customers various warranty terms based on the type of product that is sold. Warranty expense is determined based on historic claim experience and the nature of the product category. The following table summarizes activity related to our product warranty liability for the thirteen week periods ended March 26, 2023 and March 27, 2022. 13 Weeks Ended: (In millions) March 26, 2023 March 27, 2022 Reserve balance at the beginning of the period $ 11.2 $ 7.0 Provision for warranties issued 9.1 8.7 Settlements made (in cash or in kind) ( 8.1 ) ( 8.2 ) Reserve balance at the end of the period $ 12.2 $ 7.5 17 Table of Contents Litigation The Company is a defendant in lawsuits that are ordinary routine litigation matters incidental to our business and operations. It is not possible to predict the outcome of the pending actions, and, as with any litigation, it is possible that these actions could be decided unfavorably to the Company. The Company believes that there are meritorious defenses to these actions and that these actions will not have a material adverse effect upon the Company’s results of operations, cash flows or financial condition, and where appropriate, these actions are being vigorously contested. Accordingly, the Company believes the likelihood of material loss is remote. Environmental We reserve for remediation activities to clean up potential environmental liabilities as required by federal and state laws based on our best estimate of undiscounted future costs, excluding possible insurance recoveries or recoveries from other third parties. There were no material environmental accruals as of March 26, 2023 and December 25, 2022. 18 Table of Contents 14. Accumulated Other Comprehensive (Loss) Income Total accumulated other comprehensive (loss) income consists of net income and other changes in business equity from transactions and other events from sources other than stockholders. It includes currency translation gains and losses, realized gains and losses from derivative instruments designated as hedges, and defined benefit plan adjustments. The after-tax components of and changes in accumulated other comprehensive (loss) income for the thirteen weeks ended March 26, 2023 and March 27, 2022 were as follows: (In millions) Foreign Currency Adjustments Derivative Hedging Gain (Loss) Pension and Other Postretirement Plans Adjustments Accumulated Other Comprehensive (Loss) Income Balance at December 25, 2022 $ ( 8.0 ) $ 2.8 $ ( 9.3 ) $ ( 14.5 ) Amounts classified into accumulated other comprehensive (loss) income ( 0.2 ) 2.6 — 2.4 Amounts reclassified into earnings — ( 2.4 ) — ( 2.4 ) Net current period other comprehensive (loss) income ( 0.2 ) 0.2 — — Balance at March 26, 2023 $ ( 8.2 ) $ 3.0 $ ( 9.3 ) $ ( 14.5 ) Balance at December 26, 2021 $ 1.9 $ 0.1 $ ( 5.9 ) $ ( 3.9 ) Amounts classified into accumulated other comprehensive income 6.5 2.2 0.1 8.8 Amounts reclassified into earnings — ( 0.5 ) — ( 0.5 ) Net current period other comprehensive income 6.5 1.7 0.1 8.3 Balance at March 27, 2022 $ 8.4 $ 1.8 $ ( 5.8 ) $ 4.4 The reclassifications out of accumulated other comprehensive income (loss) for the thirteen weeks ended March 26, 2023 and March 27, 2022 were as follows: (In millions) Details about Accumulated Other Comprehensive (Loss) Income Components Affected Line Item in the Condensed Consolidated Statements of Income 13 Weeks Ended March 26, 2023 March 27, 2022 Gains on cash flow hedges Foreign exchange contracts $ ( 2.4 ) $ ( 0.5 ) Cost of products sold Total reclassifications for the period $ ( 2.4 ) $ ( 0.5 ) Net of tax 19 Table of Contents 15. Related Party Transactions The accompanying financial statements are now presented on a consolidated basis as the company is a standalone public company. Certain information from prior to the Separation on December 14, 2022 was derived from Fortune Brands consolidated financial statements and accounting records. Transactions between MasterBrand and Fortune Brands prior to the Separation have been presented as related party transactions in the accompanying condensed consolidated financial statements. After the Separation, Fortune Brands is not considered a related party of MasterBrand, Inc. Fortune Brands performed, and continues to perform in limited areas as part of a transitional services agreement, certain corporate functions, including information technology, finance, executive, human resources, supply chain, internal audit, governance and legal services on behalf of the Company. The expenses associated with these functions have been allocated based on direct usage or benefit where specifically identifiable, with the remainder allocated on a proportional cost allocation method based primarily on net sales, employee headcount, or number of facilities, as applicable. Prior to the Separation, total expenses allocated were $ 20.1 million for the thirteen weeks ended March 27, 2022, and such amounts are primarily included within selling, general and administrative expenses in the condensed consolidated statements of income. These amounts include costs of $ 12.1 million for the thirteen weeks ended March 27, 2022 that were not historically allocated to us as part of Fortune Brands’ normal periodic management reporting process. We consider the expense methodology and resulting allocation to be reasonable for all periods presented; however, the allocations may not be indicative of actual expenses that would have been incurred had we operated as an independent, publicly-traded company for the prior year period presented. Actual costs that we may have incurred had we been a standalone company would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by our employees and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology and infrastructure. Cash Management Fortune Brands utilized a central approach to treasury management, and prior to the Separation, we historically participated in related cash pooling arrangements to maximize the availability of cash for general operating and investing purposes. Under these cash pooling arrangements in the United States, cash balances were remitted regularly from our accounts. Our cash and cash equivalents on our condensed consolidated balance sheets represent cash balances held in bank accounts owned by the Company and its subsidiaries. Share-Based Compensation Prior to the Separation, our employees participated in Fortune Brands stock-based compensation plans, the costs of which have been allocated and recorded in cost of products sold, and selling, general and administrative expenses in the condensed consolidated statements of income. Stock-based compensation costs related to our employees for the thirteen weeks ended March 27, 2022 was $ 2.7 million, and are included within the total expenses allocated, as noted above. Related Party Sales There were no material sales to or from Fortune Brands or its subsidiaries for any of the periods presented. Balances Due to and From Related Parties After the Separation, Fortune Brands is not considered a related party of MasterBrand, Inc. As such, there are no related party receivables or payables outstanding as of March 26, 2023 and December 25, 2022. Refer to Note 5, “Balance Sheet Information,” for additional details of the accounts payable due from MasterBrand, Inc. to Fortune Brands as of March 26, 2023 and December 25, 2022. Prior to Separation, the related party note receivable balance was the amount owed to the Company and its subsidiaries from Fortune Brands. We had written interest-bearing loan agreements in place with Fortune Brands. The receivable balance consisted of excess cash remitted to the Parent’s cash pooling arrangements, net of expenses incurred by us which were paid for by Fortune Brands. The loan agreements were to mature on April 14, 2026, but all amounts under these agreements were settled prior to the Separation. The receivable balance earned interest at a rate in-line with the Fortune Brands’ short-term borrowing rate, which was between 0.95 percent and 1.40 percent during the thirteen weeks ended March 27, 2022. 20 Table of Contents Prior to the Separation, the related party note payable balance was a note payable between a subsidiary of the Company and Fortune Brands. The balance comprised of a revolving loan that was due at the maturity of the agreement on April 15, 2026, but was settled prior to the Separation. The note bore interest at rates ranging between 1.20 percent and 1.65 percent during the thirteen weeks ended March 27, 2022. The Company received interest income on related party receivables of $ 1.3 million during the thirteen weeks ended March 27, 2022. Additionally, the Company incurred interest expense on intercompany payables and notes of $ 0.2 million for the thirteen weeks ended March 27, 2022. 16. Subsequent Events Stock Repurchase Program On May 9, 2023, subsequent to the balance sheet date, we announced our authorization of a stock repurchase program under which we may repurchase up to $ 50.0 million of MasterBrand common stock over a twenty-four month period at management’s discretion for general corporate purposes. As a result of this authorization, we may repurchase shares from time to time through open market purchases, privately-negotiated transactions, block trades or otherwise in accordance with applicable federal securities laws. The timing and amount of our purchases will depend upon prevailing market conditions, our available capital resources, our financial and operational performance, alternative uses of capital and other factors. We may limit or terminate the repurchase program at any time. 21 Table of Contents