What changed in this filing

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Item 1. Business

2024-02-27 compared with 2023-03-10 · 58 added, 56 removed, 118 unchanged (49% of the section changed)

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(“we,” “us,” “our,” “MasterBrand” or the “Company”) was founded nearly 70 years ago in 1954 under the name United Cabinet Incorporated.

We are the largest manufacturer of residential cabinets in North America, based on 2021 net sales.

We are the largest manufacturer of residential cabinets in North America, based on 2022 reported net sales.

Our products are sold throughout the United States and Canada to the remodeling and new construction markets through three primary channels:

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Further, our decades of experience have informed how we use global geographies to optimize procurement and manufacturing costs.

Finally, with the most extensive dealer network throughout the United States and Canada, we have an advantaged distribution model that cannot be easily replicated.

Finally, with the most extensive dealer network throughout the United States and Canada, we have an advantaged distribution model that we believe cannot be easily replicated.

We plan to further extend our competitive advantages by using technology and data to enhance the consumer’s experience from visualization and ordering to delivery and installation.

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Our ever-evolving business system and center of our culture is The MasterBrand Way.

Based on foundational lean tools, The MasterBrand Way enables our associates across all locations and levels of work to operate under common frameworks and consistent lexicon to effectively develop cross-functional solutions to complex business issues.

Based on foundational lean tools, The MasterBrand Way enables our associates across all locations and levels of work to operate under common frameworks and a consistent lexicon to effectively develop cross-functional solutions to complex business issues.

The MasterBrand Way organizes these proven lean tools around three guiding principles:

The Four Basics, Continuous Improvement and Associate Engagement.

Our disciplined deployment of these tools in recent years drove our strategic transformation and improvements in commercial and operational efficiency.

Our disciplined deployment of these tools in recent years has driven our strategic transformation and improvements in commercial and operational efficiency.

To derive further efficiencies, we added three incremental initiatives to The MasterBrand Way:

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Align to Grow – Deliver on the unique needs of each customer

As an organization that historically grew through acquisitions, processes across the disparate acquired companies was inherently different.

As an organization that historically grew through acquisitions, processes across the disparate acquired companies were inherently different.

We believe we have further opportunities to both commercially and operationally align our business to reduce complexity in our product offering to customers.

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Our ability to reduce complexity in our product offering, and move to common platforms, enables us to simplify our manufacturing processes as well.

Common platforms across plants and standard work allows us to drive supply chain efficiencies.

Common platforms across plants and standard work allow us to drive supply chain efficiencies.

In addition to leveraging scale across our network, we believe these initiatives will reduce our lead times, allow for more rapid reaction to changing customer needs and preferences and increase our ability to respond to any future macroeconomic or other disruptions.

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The MasterBrand Way and the associated lean tools not only drive efficiencies, but engage our associates in the process.

The importance of human capital, specifically the ability to attract, retain and develop associates, has become more

apparent in a post-pandemic world.

The importance of human capital, specifically the ability to attract, retain and develop associates, has become more apparent in a post-pandemic world.

Through weekly kaizen events across our manufacturing facilities and offices, we provide the individuals closest to our business problems with the training and tools required to fix these issues.

Through empowering associates to remedy issues locally, it fosters problem-solving and enhances our culture of continuous improvement.

Beyond improved engagement and retention, we are able to witness leadership amongst our associates and develop internal talent.

Through empowering associates to remedy issues locally, the MasterBrand Way fosters problem-solving and enhances our culture of continuous improvement.

Beyond improved engagement and retention, we are able to witness leadership among our associates and develop internal talent.

As opportunities present themselves across the organization, we are positioned to staff these roles internally.

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In addition, we believe there is ongoing potential in the e-commerce channel for cabinets and vanities.

We believe there is opportunity for us to expand in this channel, through known large e-commerce platforms, our existing retailers’ websites, digital native specialized e-tailors or direct-to-consumer opportunities.

We believe there is opportunity for us to expand in this channel, through commonly known large e-commerce platforms, our existing retailers’ websites, digital native specialized e-tailors or direct-to-consumer opportunities.

As a result of our scale, our streamlined product offerings and our existing relationships, we believe we are uniquely positioned to win in the e-commerce space, and we plan to be the market leader in this high-potential channel.

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We expect to drive long-term stockholder value by utilizing a disciplined process to identify, evaluate, and execute strategic acquisitions and integrate acquired businesses.

Our products are sold throughout the United States and Canada to the remodeling and new construction markets through three primary channels:

Our products are sold primarily throughout the United States and Canada to the remodeling and new construction markets through three primary channels:

Dealers, Retailers and Builders.

We have built the industry’s largest and, we believe, strongest network, with well-established relationships with over 4,500 cabinet dealers across the United States and Canada, many with whom we have worked for decades.

Our dealers cover a wide portion of the market, with some specializing in R&R, while others provide regional service to a variety of new construction home builders.

Our extensive dealer network allows us to have exceptional market reach and the ability to target key growth areas.

We serve the top retailers in North America and have developed strong and lasting partnerships with them, as a result of our category management and commitment to best-in-class execution.

We strategically partner with the industry’s best and most profitable builders for single-family construction.

In addition, we are actively growing our presence in the emerging cabinets e-commerce channel, including through our channel partners’ online presence, and are actively partnering with leading players to develop continuing opportunities to penetrate and innovate in this exciting category.

We built the industry’s largest and, we believe, strongest network, with well-established relationships with over 4,400 cabinet dealers across the United States and Canada, many of whom have been partners for decades.

Our dealers cover a wide spectrum of the market.

Some specialize in remodeling, while others provide regional service to a variety of new construction home builders.

Our extensive dealer network allows us to have exceptional market reach and the ability to target key growth markets .

We serve a variety of retailers, including the top continental retailers in North America, and have developed strong and lasting partnerships with them as a result of our deliberate category management and commitment to best-in-class execution.

Retail sales occur in-store and through various emerging and established e-commerce channels, including our retail channel partners’ online presence .

We strategically partner with the industry’s regional and large scale builders for single-family construction throughout North America, serving them directly or through a large distribution network, allowing us to customize our service to each builder’s expectations.

Our relationships with our key builders and our channel partners that service them have existed for decades, and we continue to work together to penetrate new and growing single-family construction markets .

In addition, we are actively growing our presence in the emerging cabinets e-commerce channel, including through our retail channel partners’ online presence, and are actively partnering with leading players to develop continuing opportunities to penetrate and innovate in this exciting category.

Our business competes based on quality, price, service and responsiveness to dealer, retailer and builder needs, as well as end-user consumer preferences.

Our markets are very competitive.

Lowe’s Companies, Inc.

(“Lowe’s”) comprised approximately 21 percent and 20 percent of our net sales for our 2023 and 2022 fiscal years, respectively.

The Home Depot, Inc.

(“The Home Depot”) comprised approximately 16 percent and 17 percent of our net sales for our 2023 and 2022 fiscal years, respectively.

Net sales to international markets represented approximately 5 percent and 6 percent for our 2023 and 2022 fiscal years, respectively.

We offer a comprehensive portfolio of leading residential cabinetry products for the kitchen, bathroom and other parts of the home.

Our products are available in a wide variety of designs, finishes and styles and span the most attractive

categories of the cabinets market:

Our 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.

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and finally, (3) premium products enable consumers to achieve their dream home by designing highly customized cabinets to meet their exact specifications—if they can dream it, we can make it.

Our business competes based on quality, price, service and responsiveness to dealer, retailer and builder needs, as well as end-user consumer preferences.

Our markets are very competitive.

Lowe’s Companies, Inc.

(“Lowe’s”) comprised approximately 20 percent and 18 percent of our net sales for our 2022 and 2021 fiscal years, respectively.

The Home Depot, Inc.

(“The Home Depot”) comprised approximately 17 percent and 18 percent of our net sales for our 2022 and 2021 fiscal years, respectively.

Approximately 6 percent of our net sales for both of our 2022 and 2021 fiscal years were to international markets.

Raw Materials

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Although we rely on certain patents and patent groups that provide important protections to us, no single patent or patent group is material to our business as a whole.

We traditionally experience lower sales in the first quarter of the year when new home construction and R&R activity are at their lowest.

As a result of sales seasonality and associated timing of working capital fluctuations, our cash flow from operating activities is typically higher in the second half of the year.

There is year-round demand for our products.

However, we traditionally experience lower sales in the first quarter of the year when new home construction and R&R activity are at their lowest.

As a result of the seasonal demand pattern and associated timing of working capital fluctuations, our cash flow from operating activities is typically higher in the second half of the year.

Environmental Matters

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Forest Service to promote the health and public enjoyment of our 193-million-acre National Forest System.

We support NFF’s campaign to plant 50 million trees across national forests.

We support NFF’s campaign to plant 50 million trees across national forests by the end of 2025, of which, the NFF has planted 32.9 million trees as of December 31, 2023.

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.

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We are subject to a wide variety of local, state, and federal laws and regulations in the countries where we conduct business.

This includes compliance with the Lacey Act, governing trade in wildlife, fish, and plants in the U.S., and the Toxic Substances Act, which relates to the production, importation, use, and disposal of specific chemicals in the U.S.

Compliance with these laws and regulations often requires the dedication of time and effort of employees, as well as financial resources.

These laws and regulations often require the dedication of time and effort of associates, as well as financial resources.

During 2023, compliance with the applicable regulations did not have a material effect on our capital expenditures, earnings, or competitive position.

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As of December 31, 2023, we had more than 12,000 full-time and part-time associates (excluding contract workers).

Approximately 83 percent of our workforce is composed of hourly production and distribution associates and the remaining population is composed of associates in administrative roles.

Approximately 82 percent of our workforce is composed of hourly production and distribution associates and the remaining population is comprised of associates in administrative roles.

As of December 31, 2023, approximately 37 percent of our associates worked under collective bargaining agreements.

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We are a values-based organization and believe our strong culture is a true differentiator.

We are guided by “The MasterBrand Way;” a cultural foundation of empowering teams to trust the process and knowledge from those closest to the work, embracing the full, diverse team of individuals and experiences, and a drive to move forward and be better every day.

We build associate opportunity, purpose, and reward into everything we do creating a culture where our associates can thrive.

We are guided by our purpose of building great experiences together.

We do this through The MasterBrand Way, a cultural foundation where every individual plays a role to make the team better, be bold to drive our business forward and champion improvement in all that we do.

We build opportunity, purpose, and reward into our associate experience and create a culture where our associates can thrive and bring the full power of MasterBrand to all that we do.

We invest in our teams and develop our associates to become the next generation of leaders who seek out a continuous improvement mindset in all aspects of our business to unlock our full potential.

We also endeavor to create a best place to work environment that keeps our associates safe, values their unique experiences and perspectives and fosters a culture of collaboration and belonging.

We also endeavor to create a best place to work environment that keeps our associates safe, values their unique experiences and perspectives and fosters a culture of ethical behavior, transparency, honesty, business integrity, collaboration and belonging.

We do this through the programs summarized below, and the objectives and related risks of each are overseen by our Board of Directors or its committees.

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This is reflected in our goal of zero safety incidents and through our efforts to create an injury-free workplace.

Our Employee Safety & Environmental Policies set standards for how we maintain a safe work environment and guides our business operations.

Our Employee Safety & Environmental Policies set standards for how we maintain a safe work environment and guide our business operations.

We also have an Environmental, Health & Safety Leadership team comprised of representatives from across our operations that share best practices and are responsible for driving environmental, health and safety strategy.

This helps drive our best-in-class programs designed to reinforce positive behaviors, to empower our associates to actively take part in maintaining a safe work environment, to heighten awareness and to mitigate risk on critical safety components.

This team helps drive our best-in-class programs designed to reinforce positive behaviors, to empower our associates to actively take part in maintaining a safe work environment, to heighten awareness and to mitigate risk on critical safety components.

Within each of our manufacturing and distribution facilities, we have site-specific safety and environmental plans designed to reduce risk.

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Our safety focus is also demonstrated by comparing our TRIR and LTR to the Bureau of Labor Statistics (“BLS”) industry averages.

For our 2022 fiscal year, our TRIR and LTR were below the 2021 BLS industry averages for each of 3.4 and 1.1, respectively.

For our 2023 fiscal year, our TRIR and LTR were below the 2022 BLS industry averages of 3.3 and 1.3, respectively.

Attracting and Retaining Superior Talent

To attract and retain superior talent at all levels of our Company, we have designed our offerings to be competitive and are seen as a community leader where our associates live and work.

To attract and retain superior talent at all levels of our Company, we have designed our offerings to be competitive and are seen as a leader in the communities where our associates live and work.

Our total rewards are designed to be market competitive, align incentives with our performance and provide physical, emotional, and financial well-being support to meet the individualized needs of our associates.

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We also offer a range of benefits including retirement savings plans, comprehensive healthcare and mental-health benefits, including medical, dental and vision coverage, health savings and spending accounts, wellness and associate assistance services.

In 2022, we strengthened inclusivity in our benefit offerings by providing enhanced parental support benefits for our U.S.

associates, including fertility benefits and specialized support from adoption and surrogacy assistance to pregnancy and post-partum.

Creating a Culture of DEI

We continue to take measured actions that create an inclusive culture and diverse workforce, increase representation and celebrate our diverse team of associates and experiences.

We believe that attracting and engaging talented and diverse associates enables us to be more innovative, responsive to consumer needs and deliver strong performance and growth.

We are committed to increasing representation of professionals of color and women through hiring and promoting the right talent, ensuring an inclusive culture through proactive programs, business practices and education and by demonstrating support for equality in our communities through outreach and investment.

As of December 25, 2022, our worldwide

workforce was composed of approximately 37 percent women, while our workforce in the U.S.

In 2023, we strengthened inclusivity in our benefit offerings by providing enhanced parental support from fertility through post-partum for our U.S.

Creating an Inclusive, Team-Based Culture

We value fostering an inclusive, team-based culture and celebrate our diverse team of associates and experiences.

We believe attracting and engaging talented and diverse associates enables us to be more innovative, responsive to consumer needs and deliver strong performance and growth.

We are committed to increasing the representation of professionals of color and women through building and developing robust talent pools, ensuring an inclusive, team-based culture through proactive programs, business practices and education, and by demonstrating support for equality in our communities through outreach and investment.

As of December 31, 2023, our worldwide workforce was composed of approximately 35 percent women, while our workforce in the U.S.

and Canada was composed of approximately 34 percent people of color.

All managers participated in an unconscious bias learning program, which was a 3 year program completed in 2022, and we hosted several roundtable discussions to learn where we can better support underrepresented talent.

Our engagement pulse survey fosters our associate listening strategy, providing routine feedback and meaningful action to drive improvement in our culture and DEI awareness.

Our engagement pulse survey fosters our associate listening strategy, providing routine feedback and meaningful action to drive improvement in our culture and awareness of diversity, equity, and inclusion.

Talent Development and Succession

We leverage our MasterBrand Way culture as the foundation for our talent development philosophy by empowering teams to trust the tools and learn from those closest to the work, empower each team member and move forward by equipping our associates with tools to grow and be their best every day.

We provide associates the tools to be successful in their current role and help them to develop the skills to build on opportunities to grow their career through career ladders and learning programs.

We understand our most critical roles that serve as points of leverage to deliver value and place our best people in those roles, while attracting new talent and capabilities in support of continuous improvement in all we do.

We use performance management programs to support a high-performance culture, strengthening our associate engagement and helping to retain our top talent.

We provide associates with relevant skills training and provide leadership training for production and distribution associates in a supervisory role and mid-level office associates.

We also make a significant investment in assessing our talent against the jobs both in the near term and the future and ensuring our leaders are prepared for greater levels of responsibility and can successfully transition into new roles.

Our talent philosophy guides our talent management approach from hiring to talent development and succession planning.

We believe that it is about the team, and individual success cannot be achieved without exceptional team performance.

We provide associates the tools to be successful in their current role and invest in front-line leader training across the organization to ensure we are developing those with the greatest impact on our associate experience.

We expect high performance and raise the bar on ourselves every year.

We invest heavily in goal setting to create clarity and alignment and use performance management programs to support this high-performance culture.

We understand that our most critical roles serve as points of leverage to deliver value, and we place our best people in those roles, while attracting new talent and capabilities in support of continuous improvement in all we do.

Our culture of making the team better, being bold and championing improvement is embedded in our performance management programs to drive alignment across teams.

Finally, we know that we grow through transparency and have courageous conversations about expectations and development to ensure that we are helping each other be better every day.

Succession planning for critical roles is an important part of our talent program.

Succession and development plans are created and monitored to ensure progress is made along established timelines.

We make a significant investment in assessing our talent against our human capital needs both in the near term and the future and ensuring our leaders are prepared for greater levels of responsibility and can successfully transition into new roles.

Legal Structure

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business