MasterBrand, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS (Unaudited) MasterBrand, Inc. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) 13 Weeks Ended 26 Weeks Ended (U.S. Dollars presented in millions, except per share amounts) June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 NET SALES $ 676.5 $ 695.1 $ 1,314.6 $ 1,371.8 Cost of products sold 445.5 458.9 878.9 931.0 GROSS PROFIT 231.0 236.2 435.7 440.8 Selling, general and administrative expenses 146.7 141.7 284.5 277.0 Amortization of intangible assets 3.7 4.0 7.4 8.0 Restructuring charges 2.8 3.1 3.2 2.7 OPERATING INCOME 77.8 87.4 140.6 153.1 Interest expense 20.6 17.2 34.7 34.6 Other (income) expense, net ( 2.9 ) 0.5 ( 3.2 ) 0.9 INCOME BEFORE TAXES 60.1 69.7 109.1 117.6 Income tax expense 14.8 18.5 26.3 31.4 NET INCOME $ 45.3 $ 51.2 $ 82.8 $ 86.2 Average Number of Shares of Common Stock Outstanding Basic 127.0 128.4 127.0 128.3 Diluted 130.7 129.9 130.8 129.7 Earnings Per Common Share Basic $ 0.36 $ 0.40 $ 0.65 $ 0.67 Diluted $ 0.35 $ 0.39 $ 0.63 $ 0.66 See notes to unaudited condensed consolidated financial statements 1 Table of Contents MasterBrand, Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) 13 Weeks Ended 26 Weeks Ended (U.S. Dollars presented in millions) June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 NET INCOME $ 45.3 $ 51.2 $ 82.8 $ 86.2 Other comprehensive (loss) income, before tax: Foreign currency translation adjustments ( 10.7 ) 9.8 ( 11.8 ) 9.6 Unrealized (losses) gains on derivatives: Unrealized holding (losses) gains arising during period ( 5.7 ) 3.9 ( 3.9 ) 6.5 Less: reclassification adjustment for gains included in net income ( 0.8 ) ( 3.1 ) ( 1.3 ) ( 5.5 ) Unrealized (losses) gains on derivatives ( 6.5 ) 0.8 ( 5.2 ) 1.0 Other comprehensive (loss) income, before tax ( 17.2 ) 10.6 ( 17.0 ) 10.6 Income tax expense related to items of other comprehensive income — — — — Other comprehensive (loss) income, net of tax ( 17.2 ) 10.6 ( 17.0 ) 10.6 COMPREHENSIVE INCOME $ 28.1 $ 61.8 $ 65.8 $ 96.8 See notes to unaudited condensed consolidated financial statements 2 Table of Contents MasterBrand, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (U.S. Dollars presented in millions) June 30, 2024 December 31, 2023 ASSETS Current assets Cash and cash equivalents $ 189.4 $ 148.7 Accounts receivable, net 213.5 203.0 Inventories 270.0 249.8 Other current assets 72.4 75.7 TOTAL CURRENT ASSETS 745.3 677.2 Property, plant and equipment, net of accumulated depreciation 343.0 356.6 Operating lease right-of-use assets, net of accumulated amortization 57.2 60.1 Goodwill 924.0 925.1 Other intangible assets, net of accumulated amortization 326.8 335.5 Other assets 30.8 27.2 TOTAL ASSETS $ 2,427.1 $ 2,381.7 LIABILITIES AND EQUITY Current liabilities Accounts payable $ 173.6 $ 151.4 Current portion of long-term debt — 17.6 Current operating lease liabilities 15.7 16.1 Other current liabilities 142.9 164.3 TOTAL CURRENT LIABILITIES 332.2 349.4 Long-term debt 688.9 690.2 Deferred income taxes 81.8 83.6 Pension and other postretirement plan liabilities 8.3 7.9 Operating lease liabilities 43.8 46.3 Other non-current liabilities 13.0 10.5 TOTAL LIABILITIES 1,168.0 1,187.9 Contingencies and Accrued Losses (Note 13) Equity Common stock (par value $ 0.01 per share; authorized 750.0 million shares; 130.0 million issued and 127.0 million outstanding as of June 30, 2024 ; 129.1 million issued and 126.8 million outstanding as of December 31, 2023) 1.3 1.3 Paid-in capital 28.9 17.8 Treasury stock, at cost ( 37.7 ) ( 26.1 ) Accumulated other comprehensive loss ( 20.7 ) ( 3.7 ) Retained earnings 1,287.3 1,204.5 TOTAL EQUITY 1,259.1 1,193.8 TOTAL LIABILITIES AND EQUITY $ 2,427.1 $ 2,381.7 See notes to unaudited condensed consolidated financial statements 3 Table of Contents MasterBrand, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 26 Weeks Ended (U.S. Dollars presented in millions) June 30, 2024 June 25, 2023 OPERATING ACTIVITIES Net income $ 82.8 $ 86.2 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 25.7 23.0 Amortization of intangibles 7.4 8.0 Restructuring charges, net of cash payments 0.1 ( 12.1 ) Write-off and amortization of finance fees 7.5 1.0 Stock-based compensation 11.1 8.9 Changes in operating assets and liabilities: Accounts receivable ( 11.2 ) 58.6 Inventories ( 20.7 ) 54.0 Other current assets ( 9.1 ) 4.1 Accounts payable 21.8 ( 39.6 ) Accrued expenses and other current liabilities ( 22.9 ) ( 1.7 ) Other items 3.6 3.6 NET CASH PROVIDED BY OPERATING ACTIVITIES 96.1 194.0 INVESTING ACTIVITIES Capital expenditures (a) ( 18.3 ) ( 11.4 ) Proceeds from the disposition of assets 6.4 0.2 NET CASH USED IN INVESTING ACTIVITIES ( 11.9 ) ( 11.2 ) FINANCING ACTIVITIES Proceeds from revolving credit facility borrowings — 55.0 Issuance of Senior Notes 700.0 — Repayment of revolving credit facility borrowings — ( 210.0 ) Repayment of term loan ( 712.5 ) ( 9.4 ) Payment of financing fees ( 15.2 ) — Repurchase of common stock ( 6.5 ) ( 4.1 ) Payments of employee taxes withheld from share-based awards ( 5.1 ) ( 2.9 ) Other items ( 1.0 ) ( 0.6 ) NET CASH USED IN FINANCING ACTIVITIES ( 40.3 ) ( 172.0 ) Effect of foreign exchange rate changes on cash and cash equivalents ( 3.2 ) ( 1.7 ) NET INCREASE IN CASH AND CASH EQUIVALENTS $ 40.7 $ 9.1 Cash and cash equivalents at beginning of period $ 148.7 $ 101.1 Cash and cash equivalents at end of period $ 189.4 $ 110.2 (a) Capital expenditures of $ 3.2 million and $ 3.0 million that have not been paid as of June 30, 2024 and June 25, 2023, respectively, were excluded from the condensed consolidated statements of cash flows. See notes to unaudited condensed consolidated financial statements 4 Table of Contents MasterBrand, Inc. CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) Common Stock Paid-in Capital Treasury stock, at cost Accumulated Other Comprehensive (Loss) Income Retained Earnings Total Equity (U.S. Dollars and shares presented in millions) Shares Amount Balance at December 25, 2022 128.0 $ 1.3 $ — $ ( 0.1 ) $ ( 14.5 ) $ 1,022.5 $ 1,009.2 Comprehensive income: Net income — — — — — 86.2 86.2 Other comprehensive income — — — — 10.6 — 10.6 Stock-based compensation 0.5 — 8.9 ( 2.9 ) — — 6.0 Stock repurchase program ( 0.4 ) — — ( 4.4 ) — — ( 4.4 ) Balance at June 25, 2023 128.1 $ 1.3 $ 8.9 $ ( 7.4 ) $ ( 3.9 ) $ 1,108.7 $ 1,107.6 Balance at December 31, 2023 126.8 $ 1.3 $ 17.8 $ ( 26.1 ) $ ( 3.7 ) $ 1,204.5 $ 1,193.8 Comprehensive income: Net income — — — — — 82.8 82.8 Other comprehensive loss — — — — ( 17.0 ) — ( 17.0 ) Stock-based compensation 0.6 — 11.1 ( 5.1 ) — — 6.0 Stock repurchase program ( 0.4 ) — — ( 6.5 ) — — ( 6.5 ) Balance at June 30, 2024 127.0 $ 1.3 $ 28.9 $ ( 37.7 ) $ ( 20.7 ) $ 1,287.3 $ 1,259.1 See notes to unaudited condensed 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 “MasterBrand,” “the Company,” “we,” “our” and “us” refer to MasterBrand, Inc. and its consolidated subsidiaries, unless the context otherwise requires. Basis of Presentation 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 2024 will consist of 52 weeks ending on December 29, 2024, while our fiscal 2023 consisted of 53 weeks ended on December 31, 2023. The condensed consolidated balance sheets as of June 30, 2024 and December 31, 2023 , as well as the related condensed consolidated statements of income, comprehensive income, cash flows, and equity for the thirteen and twenty-six weeks ended June 30, 2024 and the thirteen and twenty-six weeks ended June 25, 2023, 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 2023 condensed consolidated balance sheet was derived from our audited consolidated financial statements, but does not include all disclosures required by the United States Generally Accepted Accounting Principals (“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 31, 2023 . 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, covered the repair or replacement of the Company’s assets that suffered loss or damage, provided business interruption coverage, including lost profits, and reimbursement for other expenses and costs that were incurred relating to the damages and losses suffered. For the thirteen weeks ended March 26, 2023, the Company incurred expenses of $ 9.4 million solely related to damages caused by the tornado, and no additional expenses were incurred throughout the remainder of fiscal 2023. These expenses included 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. During fiscal 2023, we received $ 7.4 million of insurance proceeds for direct costs caused by the tornado, consisting of $ 2.2 million, $ 2.0 million and $ 3.2 million received during our second, third and fourth quarters, respectively. Both the expenses and insurance recoveries were recorded as a component of cost of products sold in the condensed consolidated statements of income. Upon receipt of the final insurance proceeds in our fourth quarter of fiscal 2023, we considered this claim to be closed. 6 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 Improvements to Reportable Segment Disclosures In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment's profit or loss to assess potential future cash flows for each reportable segment and the entity as a whole. The amendments expand a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures, providing new disclosure requirements for entities with a single reportable segment, and requiring other new disclosures. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. The Company is currently evaluating the impact of adopting this guidance on the condensed consolidated financial statements and will adopt this guidance when it becomes effective in our Annual Report on Form 10-K for the fiscal year ending December 29, 2024. Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which is intended to enhance the transparency, decision usefulness and effectiveness of income tax disclosures. The amendments in this ASU require a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories. A public entity is also required to provide a qualitative description of the states and local jurisdictions that make up the majority of the effect of the state and local income tax category and the net amount of income taxes paid, disaggregated by federal, state and foreign taxes and also disaggregated by individual jurisdictions. The amendments also remove certain disclosures that are no longer considered cost beneficial. The amendments are effective prospectively for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. The Company is currently evaluating the impact of adopting this guidance on the condensed consolidated financial statements and will adopt this guidance when it becomes effective in our Annual Report on Form 10-K for the fiscal year ending December 28, 2025. 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, which generally occurs upon shipment or delivery of the products. 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 Losses," 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. 7 Table of Contents 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, 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 $ 2.0 million and $ 2.1 million as of June 30, 2024 and December 31, 2023, respectively. Refund obligations are classified within other current liabilities in our condensed consolidated balance sheets. 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 and (ii) total sales to customers by shipping location, 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 and by shipping location for the thirteen and twenty-six weeks ended June 30, 2024 and June 25, 2023 . 13 Weeks Ended 26 Weeks Ended (U.S. Dollars presented in millions) June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 Net Sales by Channel (a) Dealers (b) $ 352.7 $ 378.7 $ 667.7 $ 725.5 Retailers (c) 231.7 238.0 474.6 496.5 Builders (d) 92.1 78.4 172.3 149.8 Net sales $ 676.5 $ 695.1 $ 1,314.6 $ 1,371.8 Net Sales by Shipping Location United States $ 643.9 $ 656.4 $ 1,252.1 $ 1,299.8 Canada 28.7 34.4 53.9 64.6 Mexico 3.9 4.3 8.6 7.4 Net sales $ 676.5 $ 695.1 $ 1,314.6 $ 1,371.8 (a) Net sales by channel presented for the thirteen and twenty-six weeks ended June 25, 2023 have been reclassified to conform with the new format of this table, which is intended to provide a consolidated view of our net sales by channel and shipping location. Prior to our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, net sales by channel were presented for our domestic sales only. (b) Represents sales to dealers whose end customers include builders, professional trades and home remodelers, inclusive of sales through our dealers’ respective internet website portals. (c) Represents sales to “Do-It-Yourself” retailers, including our two largest customers: 1) Lowe’s and 2) The Home Depot, inclusive of sales through their respective internet website portals. (d) Represents sales directly to builders. 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 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. 8 Table of Contents The following table summarizes the activity for the thirteen and twenty-six weeks ended June 30, 2024 and June 25, 2023: 13 Weeks Ended 26 Weeks Ended (U.S. Dollars presented in millions) June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 Beginning balance $ 3.7 $ 8.5 $ 4.6 $ 11.6 Bad debt provision 0.1 0.3 0.1 0.7 Uncollectible accounts written off, net of recoveries ( 1.0 ) ( 2.7 ) ( 1.9 ) ( 6.2 ) Ending balance $ 2.8 $ 6.1 $ 2.8 $ 6.1 4 . Earnings Per Share 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 and twenty-six weeks ended June 30, 2024 and June 25, 2023: 13 Weeks Ended 26 Weeks Ended (U.S. Dollars presented in millions, except per share amounts) June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 Numerator: Numerator for basic and diluted earnings per share - Net income $ 45.3 $ 51.2 $ 82.8 $ 86.2 Denominator: Denominator for basic earnings per share - weighted average shares outstanding 127.0 128.4 127.0 128.3 Effect of dilutive securities - stock-based awards 3.7 1.5 3.8 1.4 Denominator for diluted earnings per share - weighted average shares outstanding 130.7 129.9 130.8 129.7 Earnings per share: Basic $ 0.36 $ 0.40 $ 0.65 $ 0.67 Diluted $ 0.35 $ 0.39 $ 0.63 $ 0.66 Approximately 0.9 million and 1.0 million shares were excluded from the calculation of diluted earnings per share for the thirteen and twenty-six weeks ended June 30, 2024, respectively, and approximately 1.0 million and 2.3 million shares were excluded from the calculation of diluted earnings per share for the thirteen and twenty-six weeks ended June 25, 2023, respectively, because their inclusion would have been anti-dilutive. 9 Table of Contents 5. Balance Sheet Information Supplemental information on our condensed consolidated balance sheets is as follows: (U.S. Dollars presented in millions) June 30, 2024 December 31, 2023 Inventories: Raw materials and supplies $ 176.0 $ 175.1 Work in process 25.7 25.1 Finished products 68.3 49.6 Total inventories $ 270.0 $ 249.8 Property, plant and equipment: Land and improvements $ 31.5 $ 31.8 Buildings and improvements to leaseholds 304.4 304.0 Machinery and equipment 561.0 551.9 Construction in progress 27.4 36.6 Property, plant and equipment, gross 924.3 924.3 Less: accumulated depreciation 581.3 567.7 Property, plant and equipment, net of accumulated depreciation $ 343.0 $ 356.6 Other current liabilities: Accrued salaries, wages and other compensation $ 41.4 $ 67.6 Accrued restructuring 1.5 1.4 Accrued income and other taxes 15.3 18.5 Accrued product warranties 10.6 12.9 Other accrued expenses 74.1 63.9 Total other current liabilities $ 142.9 $ 164.3 10 Table of Contents 6. Goodwill and Identifiable Intangible Assets We had goodwill of $ 924.0 million and $ 925.1 million as of June 30, 2024 and December 31, 2023, respectively. The change in the net carrying amount of goodwill was as follows: (U.S. Dollars presented in millions) Total Goodwill Balance at December 31, 2023 $ 925.1 Q1 2024 translation adjustments ( 0.8 ) Balance at March 31, 2024 $ 924.3 Q2 2024 translation adjustments ( 0.3 ) Balance at June 30, 2024 $ 924.0 The gross carrying value and accumulated amortization by class of intangible assets as of June 30, 2024 and December 31, 2023 were as follows: June 30, 2024 December 31, 2023 (U.S. Dollars presented in millions) Gross Carrying Amounts Accumulated Amortization Net Book Value Gross Carrying Amounts Accumulated Amortization Net Book Value Indefinite-lived tradenames $ 182.8 $ — $ 182.8 $ 184.2 $ — $ 184.2 Amortizable intangible assets Tradenames 10.2 ( 10.2 ) — 10.4 ( 10.4 ) — Customer and contractual relationships 362.7 ( 218.7 ) 144.0 363.6 ( 212.3 ) 151.3 Patents/proprietary technology 11.0 ( 11.0 ) — 11.0 ( 11.0 ) — Total 383.9 ( 239.9 ) 144.0 385.0 ( 233.7 ) 151.3 Total identifiable intangibles $ 566.7 $ ( 239.9 ) $ 326.8 $ 569.2 $ ( 233.7 ) $ 335.5 There were no impairments of goodwill or indefinite-lived assets for the thirteen and twenty-six weeks ended June 30, 2024 . 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 and twenty-six weeks ended June 30, 2024. However, it is possible that future changes in circumstances would require the Company to record additional non-cash impairment charges. 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 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. In all periods presented, the recognized gain or loss on the derivative instrument, as well as the offsetting gain or loss on the hedged item, are recognized in cost of products sold on the condensed consolidated statements of income. 11 Table of Contents • Derivative instruments that are designated as fair value hedges - The gain or loss on the derivative instrument, as well as the offsetting gain or loss on the hedged item, are recognized in other (income) expense, net on the condensed consolidated statements of income. • 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 and twenty-six weeks ended June 30, 2024 and June 25, 2023, 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 June 30, 2024, was $ 85.0 million, representing a net settlement liability of $ 3.0 million. Based on foreign exchange rates as of June 30, 2024 , we estimate that the $ 3.0 million of net derivative losses associated with cash flow hedges and included in accumulated other comprehensive inco me as of June 30, 2024, 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 June 30, 2024 and December 31, 2023 were: (U.S. Dollars presented in millions) Location June 30, 2024 December 31, 2023 Assets: Foreign exchange contracts Other current assets $ — $ 3.0 Total assets $ — $ 3.0 Liabilities: Foreign exchange contracts Other current liabilities $ 3.0 $ 0.1 Total liabilities $ 3.0 $ 0.1 The effects of cash flow hedging financial instruments included within the condensed consolidated statements of comprehensive income for the thirteen and twenty-six weeks ended June 30, 2024 and June 25, 2023 are presented in the table below. When the hedged item affects earnings, amounts are reclassed out of accumulated other comprehensive loss and recognized as a component of cost of products sold. Amount Recognized in Statement of Comprehensive Income for Cash Flow Hedging Relationships 13 Weeks Ended 26 Weeks Ended (U.S. Dollars presented in millions) June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 Foreign exchange contracts: Unrealized holding (losses) gains arising during period $ ( 5.7 ) $ 3.9 $ ( 3.9 ) $ 6.5 Less: reclassification adjustment for gains included in net income ( 0.8 ) ( 3.1 ) ( 1.3 ) ( 5.5 ) Unrealized (losses) gains on derivatives $ ( 6.5 ) $ 0.8 $ ( 5.2 ) $ 1.0 12 Table of Contents The effects of fair value hedging financial instruments included in other (income) expense, net on the condensed consolidated statements of income for the thirteen and twenty-six weeks ended June 30, 2024 and June 25, 2023 were: Amount of (Gain) Loss Recognized in Earnings on Fair Value Hedging Relationships 13 Weeks Ended 26 Weeks Ended (U.S. Dollars presented in millions) June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 Foreign exchange contracts: Hedged items $ — $ ( 0.9 ) $ ( 0.1 ) $ ( 2.0 ) Derivatives designated as hedging instruments 0.1 0.9 0.1 3.4 Net losses recognized in earnings $ 0.1 $ — $ — $ 1.4 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 for the fiscal year ended December 31, 2023. Assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023 were as follows: Fair Value (U.S. Dollars presented in millions) June 30, 2024 December 31, 2023 Assets: Derivative asset financial instruments (Level 2) $ — $ 3.0 Deferred compensation program assets (Level 2) 9.0 5.5 Total assets $ 9.0 $ 8.5 Liabilities: Derivative liability financial instruments (Level 2) $ 3.0 $ 0.1 13 Table of Contents 9. Debt The following table provides a summary of the Company’s debt as of June 30, 2024 and December 31, 2023, including the carrying value of the debt less debt issuance costs: June 30, 2024 December 31, 2023 (U.S. Dollars presented in millions) Current Long-term Current Long-term Revolving credit facility due November 2027 $ — $ — $ — $ — Term loan due November 2027 — — 18.8 693.7 Revolving credit facility due June 2029 — — — — 7.00 % Senior Notes due 2032 — 700.0 — — — 700.0 18.8 693.7 Less: Unamortized debt issuance costs — ( 11.1 ) ( 1.2 ) ( 3.5 ) Total $ — $ 688.9 $ 17.6 $ 690.2 2022 Credit Agreement 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”). The 2022 Credit Agreement was secured by certain assets as well as the guarantee of certain of our subsidiaries. The $ 750.0 million term loan had quarterly required amortization payments that began in March 2023. T he revolving credit facility was paid in full during the third quarter of fiscal 2023, and no additional amounts have been drawn against the revolving credit facility since. During the thirteen weeks ended September 24, 2023, the Company made total payments of $ 28.1 million on the term loan, consisting of a $ 4.7 million required payment due September 2023, and $ 23.4 million of required amortization payments due during each of the next three quarters. As such, we were not required to make, nor did we make, any required amortization payments associated with the term loan during the fourth quarter of fiscal 2023 or in the first half of fiscal 2024. In June 2024, the Company refinanced the 2022 Credit Agreement, including extinguishing and repaying all amounts outstanding under the existing term loan facility, inclusive of accrued and unpaid interest. As a result, there were no amounts outstanding under the term loan as of June 30, 2024. Interest rates under the 2022 Credit Agreement were 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 could range from SOFR plus 1.85 percent to SOFR plus 2.60 percent. Net leverage was defined as consolidated total indebtedness minus certain cash and cash equivalents. Consolidated EBITDA was 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 was not permitted to exceed 3.875 to 1.00 at the initial borrowing through the second fiscal quarter of 2023, adjusting downward in various future quarters before settling at 3.25 to 1.00 in January 2025. The Company was also required to maintain a minimum interest coverage ratio, defined as Consolidated EBITDA compared to consolidated interest expense, of 3.0 to 1.0. The Company was in compliance with all debt covenants under the 2022 Credit Agreement through the date of the June 2024 refinancing transaction and as of December 31, 2023 . 2024 Refinancing Transaction On May 21, 2024, the Company announced it had entered into a definitive agreement (the “Merger Agreement”) to acquire Dura Investment Holdings LLC, parent company of Supreme Cabinetry Brands, Inc. (“Supreme”), a cabinetry company, from GHK Capital Partners LP for $ 520.0 million in cash, subject to customary adjustments set forth in the Merger Agreement. On July 10, 2024, the Company completed its acquisition of Supreme. For more information, refer to Note 16, "Subsequent Events." 14 Table of Contents On June 27, 2024, the Company completed a private offering (the “Offering”) of $ 700.0 million aggregate principal amount of 7.00 percent Senior Notes due 2032 (the “Senior Notes”) and entered into an amended and restated credit agreement (the “2024 Credit Agreement”), which amends and restates the 2022 Credit Agreement. The Company used the funds from the refinancing transaction, and cash on-hand, to: 1) refinance the 2022 Credit Agreement (including repaying all amounts outstanding under the existing term loan, inclusive of accrued and unpaid interest), 2) fund the previously announced acquisition of Supreme on July 10, 2024, and 3) to pay all fees and expenses related to the foregoing transactions. The Senior Notes were issued under the Indenture dated as of June 27, 2024 (the “Indenture”) at par. The Senior Notes are the Company’s unsecured and unsubordinated debt obligations and are guaranteed, on a senior unsecured basis, by each of the Company’s existing and future subsidiaries that are borrowers under or guarantors of the 2024 Credit Agreement. The Senior Notes will mature on July 15, 2032. Interest on the Senior Notes will accrue at a rate of 7.00 percent per annum and will be payable semi-annually in arrears on January 15 and July 15, beginning on January 15, 2025. The Senior Notes had an outstanding balance of $ 700.0 million as of June 30, 2024. As of June 30, 2024, prepaid debt issuance costs related to the Notes were $ 11.1 million and will be amortized over the term of the debt. These costs are included in long-term debt in our condensed consolidated balance sheets. The Company may redeem the Senior Notes, in whole or in part, at any time and from time to time prior to July 15, 2027 at a redemption price equal to 100 percent of the principal amount of the Senior Notes redeemed plus a premium and accrued and unpaid interest. At any time and from time to time on or after July 15, 2027, the Company may, at its option, redeem the Senior Notes, in whole or in part, at the applicable redemption price set forth in the Indenture plus, in each case, accrued and unpaid interest. In addition, at any time and from time to time prior to July 15, 2027, the Company may, at its option, redeem up to 40 percent of the aggregate principal amount of the Senior Notes with the proceeds from certain equity offerings at the applicable redemption price set forth in the Indenture. The Indenture contains certain covenants, including, but not limited to, limitations and restrictions on the ability of the Company and its restricted subsidiaries (as defined in the Indenture) to (i) incur additional indebtedness and guarantee indebtedness, (ii) make restricted payments, (iii) create, incur or assume liens or use assets as security in other transactions, (iv) merge, consolidate, or sell, transfer, lease or dispose of substantially all of their assets, (v) sell or transfer certain assets, (vi) enter into or conduct transactions with affiliates of the Company and (vii) agree to certain restrictions or encumbrances on the ability of restricted subsidiaries to pay dividends, make loans or advances or to otherwise transfer property or assets to the Company or other restricted subsidiaries. These covenants are subject to a number of important conditions, qualifications, exceptions and limitations. The Indenture also includes customary events of default. Certain of the foregoing covenants will be suspended in the event that (i) the Senior Notes receive investment grade ratings from any two of Fitch Ratings Inc., Moody’s Investors Service, Inc. or S&P Global Ratings and (ii) no default or event of default has occurred and is continuing under the Indenture. The Company was in compliance with all of its debt covenants under the Indenture as of June 30, 2024. The 2024 Credit Agreement provides for a 5 -year , $ 750.0 million revolving credit facility. The revolving credit facility is not subject to amortization and will mature in June 2029. The 2024 Credit Agreement is secured by certain assets as well as the guarantee of certain of our subsidiaries. Interest rates under the revolving credit facility are variable based on the SOFR, or, at the Company’s option, at a base reference rate equal to the highest of (i) the federal funds rate plus 0.50 percent, (ii) the rate of interest last quoted by JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”) as its “prime rate” and (iii) the one-month SOFR rate plus 1.00 percent (the “Base Rate”), plus, as applicable, a margin ranging from 1.625 percent to 2.25 percent per annum for SOFR-based loans and ranging from 0.625 percent to 1.25 percent per annum for Base Rate-based loans, in each case, depending on the Company’s net leverage ratio. The Company will also pay customary agency fees and a commitment fee based on the daily unused portion of the revolving credit facility ranging from 0.20 percent to 0.30 percent per annum, depending on its net leverage ratio. The 2024 Credit Agreement contains customary representations and warranties, affirmative covenants, and restrictive covenants. The restrictive covenants limit the Company and its subsidiaries’ ability to, among other things, (i) incur indebtedness, (ii) create liens on the Company’s or such subsidiaries’ assets, (iii) engage in fundamental changes, (iv) make investments, (v) sell or otherwise dispose of assets, (vi) engage in sale-leaseback transactions, (vii) make restricted payments, (viii) engage in certain transactions with affiliates and (ix) enter into agreements restricting the ability of the Company’s subsidiaries to make distributions to the Company or incur liens on their assets. 15 Table of Contents The 2024 Credit Agreement also contains a financial covenant that does not permit the Company to allow its net leverage ratio to exceed (i) in the case of any fiscal quarter ending on or prior to December 31, 2024, 3.50 to 1:00 and (ii) in the case of any fiscal quarter ending on or following March 31, 2025, 3.25 to 1:00 or, if the Company consummates any material acquisition, then the Company’s net leverage ratio shall not exceed 3.75 to 1.00 for the applicable fiscal quarter in which such acquisition is consummated and the three consecutive fiscal quarters thereafter. The Company is also required to maintain a minimum interest coverage ratio of 3.00 to 1.00. The 2024 Credit Agreement also contains customary events of default. The occurrence of an event of default could result in the termination of commitments under the revolving credit facility, the acceleration of all outstanding amounts thereunder and the requirement to cash collateralize outstanding letters of credit. The Company was in compliance with all of its debt covenants under the 2024 Credit Agreement as of June 30, 2024. The revolving credit facility did not have an outstanding balance as of June 30, 2024 and had $ 727.3 million of availability, which consists of our $ 750.0 million revolving credit facility less outstanding letters of credit. As of June 30, 2024, prepaid debt issuance costs related to the 2024 Credit Agreement were $ 4.6 million and will be amortized over the term of the debt. At June 30, 2024, these costs are included in other assets in our condensed consolidated balance sheets. Interest paid on debt was $ 13.9 million and $ 28.0 million for the thirteen and twenty-six weeks ended June 30, 2024, respectively, and $ 17.8 million and $ 34.7 million for the thirteen and twenty-six weeks ended June 25, 2023, respectively. 10. Restructuring Charges For the thirteen and twenty-six weeks ended June 30, 2024 , we recognized restructuring charges of $ 2.8 million and $ 3.2 million, respectively. For the thirteen and twenty-six weeks ended June 25, 2023, we recognized restructuring charges of $ 3.1 million and $ 2.7 million. Restructuring charges for all periods presented are largely related to severance costs and other employee-related costs in order to better align our workforce with our forecasted demand within our manufacturing footprint. 16 Table of Contents Reconciliation of Restructuring Liability (U.S. Dollars presented in millions) Balance at March 31, 2024 Provision Cash Expenditures (a) Balance at June 30, 2024 Workforce reduction costs $ 0.5 $ 1.9 $ ( 1.0 ) $ 1.4 Other 0.1 0.9 ( 0.9 ) 0.1 $ 0.6 $ 2.8 $ ( 1.9 ) $ 1.5 (U.S. Dollars presented in millions) Balance at March 26, 2023 Provision Cash Expenditures (a) Balance at June 25, 2023 Workforce reduction costs $ 4.9 $ 2.4 $ ( 4.1 ) $ 3.2 Other 0.1 0.7 ( 0.7 ) 0.1 $ 5.0 $ 3.1 $ ( 4.8 ) $ 3.3 (U.S. Dollars presented in millions) Balance at December 31, 2023 Provision Cash Expenditures (a) Balance at June 30, 2024 Workforce reduction costs $ 1.3 $ 2.0 $ ( 1.9 ) $ 1.4 Other 0.1 1.2 ( 1.2 ) 0.1 $ 1.4 $ 3.2 $ ( 3.1 ) $ 1.5 (U.S. Dollars presented in millions) Balance at December 25, 2022 Provision Cash Expenditures (a) Balance at June 25, 2023 Workforce reduction costs $ 15.3 $ 1.3 $ ( 13.4 ) $ 3.2 Other 0.1 1.4 ( 1.4 ) 0.1 $ 15.4 $ 2.7 $ ( 14.8 ) $ 3.3 (a) Cash expenditures primarily related to severance charges. 11. Income Taxes The effective income tax rates for the thirteen weeks ended June 30, 2024 and June 25, 2023, were 24.6 percent and 26.5 percent, respectively. The net decrease in the effective tax rate between the periods is primarily due to the reduction in deferred tax liability for foreign earnings, discrete adjustments, including the stock compensation windfall benefit for shares which vested and changes due to final tax return filings, state and local income taxes and the mix of earnings in jurisdictions with differing tax rates, partially offset by changes in foreign income inclusions with offsetting foreign tax credits. The difference between our effective income tax rate for the thirteen weeks ended June 30, 2024, and the U.S. statutory rate of 21.0 percent is due to the unfavorable impact of state and local income taxes, nondeductible compensation and foreign income inclusions with offsetting tax credits, partially offset by the stock compensation windfall benefit for shares which vested and the mix of earnings in jurisdictions with differing tax rates. The difference between our effective income tax rate for the thirteen weeks ended June 25, 2023, and the U.S. statutory rate of 21.0 percent is due to the unfavorable changes in state and local income taxes, nondeductible compensation, foreign income inclusions with offsetting foreign tax credits and recognition of a deferred tax liability for foreign earnings, partially offset by the mix of earnings in jurisdictions with differing tax rates. 17 Table of Contents The effective income tax rates for the twenty-six weeks ended June 30, 2024 and June 25, 2023, were 24.1 percent and 26.7 percent, respectively. The net decrease in the effective tax rate between the periods is primarily due to the mix of earnings in jurisdictions with differing tax rates, discrete adjustments, including the stock compensation windfall benefit for shares which vested and changes due to final tax return filings, state and local income taxes and deferred tax liability for foreign earnings, partially offset by changes in foreign income inclusions with offsetting foreign tax credits. The difference between our effective income tax rate for the twenty-six weeks ended June 30, 2024, and the U.S. statutory rate of 21.0 percent is due to the unfavorable impact of state and local income taxes, foreign income inclusions with offsetting tax credits and nondeductible compensation, partially offset by the stock compensation windfall benefit for shares which vested and the mix of earnings in jurisdictions with differing tax rates. The difference between the Company’s effective income tax rate for the twenty-six weeks ended June 25, 2023, and the U.S. statutory rate of 21.0 percent is due to unfavorable changes in state and local income taxes, nondeductible compensation, foreign income inclusions with offsetting foreign tax credits, recognition of a deferred tax liability for foreign earnings and changes due to foreign tax return filings, partially offset by the mix of earnings in jurisdictions with differing tax rates. 12. Pension and Other Postretirement Plans We have a defined benefit pension plan in the United States covering many of the Company’s associates. In addition, the Company provides postretirement health care and life insurance benefits to certain retirees. The defined benefit pension plan has been frozen to new participants and benefit accruals were frozen for active participants on or before December 31, 2016. During 2023, our Board of Directors approved a plan to terminate the defined benefit pension plan. The termination and settlement process, which preserves retirement benefits due to participants but changes the ultimate payor of such benefits, is expected to take up to 24 months to complete, subject to receipt of customary regulatory approvals. During 2024, the Company is offering a lump-sum benefit payout option to certain plan participants. During 2025, we expect to complete the purchase of group annuity contracts that will transfer any remaining pension benefit obligation to an insurance company. The components of net periodic cost (benefit) for pension and other postretirement plans for the thirteen and twenty-six weeks ended June 30, 2024 and June 25, 2023, respectively, are as set forth in the tables 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 cost (benefit) are classified as other (income) expense, net in the condensed consolidated statements of income. Pension Benefits Postretirement Benefits 13 Weeks Ended 13 Weeks Ended (U.S. Dollars presented in millions) June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 Service cost $ — $ — $ 0.1 $ 0.1 Interest cost 1.3 1.6 0.1 0.1 Expected return on plan assets ( 1.0 ) ( 1.8 ) — — Net periodic cost (benefit) $ 0.3 $ ( 0.2 ) $ 0.2 $ 0.2 Pension Benefits Postretirement Benefits 26 Weeks Ended 26 Weeks Ended (U.S. Dollars presented in millions) June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 Service cost $ — $ — $ 0.2 $ 0.2 Interest cost 2.6 3.2 0.2 0.1 Expected return on plan assets ( 2.0 ) ( 3.5 ) — — Net periodic cost (benefit) $ 0.6 $ ( 0.3 ) $ 0.4 $ 0.3 18 Table of Contents 13. Contingencies and Accrued Losses 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 and twenty-six weeks ended June 30, 2024 and June 25, 2023. 13 Weeks Ended 26 Weeks Ended (U.S. Dollars presented in millions) June 30, 2024 June 25, 2023 June 30, 2024 June 25, 2023 Reserve balance at the beginning of the period $ 11.6 $ 12.2 $ 12.9 $ 11.2 Provision for warranties issued 5.5 9.0 10.9 18.1 Settlements made (in cash or in kind) ( 6.5 ) ( 8.0 ) ( 13.2 ) ( 16.1 ) Reserve balance at the end of the period $ 10.6 $ 13.2 $ 10.6 $ 13.2 Litigation The Company is a defendant in lawsuits that are ordinary routine litigation matters incidental to our business and operations. In addition, other matters, including tax assessments, audits, claims and governmental investigations and proceedings covering a wide range of matters are pending against us. It is not possible to predict the outcome of the pending actions, and, as with any such matters, 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. However, such matters are subject to inherent uncertainties and unfavorable rulings or other events could occur. The Company regularly undergoes tax audits in various jurisdictions in which our products are sold or manufactured. In the future, costs related to such audits or an unfavorable outcome could have a material impact on our condensed consolidated results of operations, cash flows and financial condition. Following an audit for the 2018 tax year, the Mexican tax administration service, the Servicio de Administración Tributaria, (the “SAT”), issued a tax assessment in the amount of approximately $ 54.9 million to our subsidiary, Woodcrafters Home Products, S. de R.L. de C.V., for allegedly failing to make certain tax payments and to export timely certain merchandise. The Company disputed these findings and the SAT annulled their decision on January 11, 2024. In order to prevent the 2018 tax year from further audit by the SAT, the Company has filed an action to declare this annulment final in the specialized court of trade and customs in Monterrey, Nuevo Leon, Sala Especializada en Materia de Comercio Exterior y Auxiliar – Noreste, Tribunal Federal de Justicia Administrativa. We reserved an immaterial amount related to the 2018 tax year audit as our best estimate of our probable liability as of June 30, 2024 and December 31, 2023. While we cannot predict with certainty the outcome of any future review relating to the 2018 tax year or other open tax years, based on currently known information, we believe our risk of additional loss is remote and not estimable. 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 June 30, 2024 and December 31, 2023. 19 Table of Contents 14. Accumulated other comprehensive loss Total accumulated other comprehensive loss 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 cash flow hedges, and defined benefit plan adjustments. The after-tax components of and changes in accumulated other comprehensive loss for the thirteen and twenty-six weeks ended June 30, 2024 and June 25, 2023 were as follows: (U.S. Dollars presented in millions) Foreign Currency Adjustments Derivative Hedging Gain (Loss) Pension and Other Postretirement Plans Adjustments Accumulated Other Comprehensive (Loss) Income Balance at March 31, 2024 $ 3.0 $ 3.5 $ ( 10.0 ) $ ( 3.5 ) Amounts classified into accumulated other comprehensive loss ( 10.7 ) ( 5.7 ) — ( 16.4 ) Amounts reclassified into earnings — ( 0.8 ) — ( 0.8 ) Net current period other comprehensive loss ( 10.7 ) ( 6.5 ) — ( 17.2 ) Balance at June 30, 2024 $ ( 7.7 ) $ ( 3.0 ) $ ( 10.0 ) $ ( 20.7 ) Balance at March 26, 2023 $ ( 8.2 ) $ 3.0 $ ( 9.3 ) $ ( 14.5 ) Amounts classified into accumulated other comprehensive income 9.8 3.9 — 13.7 Amounts reclassified into earnings — ( 3.1 ) — ( 3.1 ) Net current period other comprehensive income 9.8 0.8 — 10.6 Balance at June 25, 2023 $ 1.6 $ 3.8 $ ( 9.3 ) $ ( 3.9 ) (U.S. Dollars presented in millions) Foreign Currency Adjustments Derivative Hedging Gain (Loss) Pension and Other Postretirement Plans Adjustments Accumulated Other Comprehensive (Loss) Income Balance at December 31, 2023 $ 4.1 $ 2.2 $ ( 10.0 ) $ ( 3.7 ) Amounts classified into accumulated other comprehensive loss ( 11.8 ) ( 3.9 ) — ( 15.7 ) Amounts reclassified into earnings — ( 1.3 ) — ( 1.3 ) Net current period other comprehensive loss ( 11.8 ) ( 5.2 ) — ( 17.0 ) Balance at June 30, 2024 $ ( 7.7 ) $ ( 3.0 ) $ ( 10.0 ) $ ( 20.7 ) Balance at December 25, 2022 $ ( 8.0 ) $ 2.8 $ ( 9.3 ) $ ( 14.5 ) Amounts classified into accumulated other comprehensive income 9.6 6.5 — 16.1 Amounts reclassified into earnings — ( 5.5 ) — ( 5.5 ) Net current period other comprehensive income 9.6 1.0 — 10.6 Balance at June 25, 2023 $ 1.6 $ 3.8 $ ( 9.3 ) $ ( 3.9 ) 20 Table of Contents 15. Stock Repurchase Program On May 9, 2023, we announced our Board of Directors’ authorization of a stock repurchase program under which we may repurchase up to $ 50.0 million of our 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, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities Exchange Act of 1934, as amended. 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. During the thirteen and twenty-six weeks ended June 30, 2024, we repurchased 267,499 and 371,499 shares of our common stock under this program, respectively. The shares were repurchased at a cost of approximately $ 4.6 million and $ 6.5 million, respectively, or an average of $ 17.30 and $ 17.58 per share, respectively, during the thirteen and twenty-six weeks ended June 30, 2024. During the thirteen and twenty-six weeks ended June 25, 2023, we repurchased 404,858 shares of our common stock under this program. The shares were repurchased at a cost of approximately $ 4.4 million, or an average of $ 10.89 per share, during the thirteen and twenty-six weeks ended June 25, 2023. As of June 30, 2024, $ 21.5 million remained authorized for purchase under our stock repurchase program. 16. Subsequent Events On July 10, 2024, we completed our previously announced acquisition of Supreme, a cabinetry company, from GHK Capital Partners LP for $ 520.0 million in cash, subject to customary adjustments set forth in the Merger Agreement. Supreme is a domestic manufacturer of residential cabinetry with a portfolio of product lines significantly focused on premium products. Supreme, with manufacturing facilities located in Minnesota, Iowa and North Carolina, and its two brands, Dura Supreme and Bertch cabinetry, crafts framed and frameless cabinetry for a nationwide network of dealers. We funded the acquisition with a combination of cash on hand and $ 430.0 million of proceeds from the revolving credit facility provided for by the 2024 Credit Agreement (see Note 9, “Debt” for further details). We are currently in the process of determining the initial purchase accounting for this transaction. Based on the timing of the acquisition and lack of available information, we determined it to be impracticable to disclose a preliminary purchase price allocation at this time. The Company incurred $ 4.4 million of acquisition-related costs associated with the transaction in the second quarter of 2024, which are recorded within selling, general and administrative expenses in the condensed consolidated statements of income. 21 Table of Contents