What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-19 compared with 2024-02-27 · 382 added, 253 removed, 1085 unchanged (37% of the section changed)

15 unchanged sentences

Interest expense 74.0 65.2 2.2

Other expense, net 2.4 0.6 0.6

Gain on sale of asset ( 4.3 ) — —

Other (income) expense, net ( 2.3 ) 2.4 0.6

INCOME BEFORE TAXES

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NET INCOME $ 125.9 $ 182.0 $ 155.4

Other comprehensive income (loss), before tax:

Other comprehensive (loss) income, before tax:

Foreign currency translation adjustments ( 27.7 ) 12.1 ( 9.9 )

Unrealized (losses) gains on derivatives:

Unrealized holding gains arising during period

reclassification adjustment for gains included in net income

( 10.2 ) ( 4.5 ) ( 2.9 )

Unrealized holding (losses) gains arising during period ( 10.1 ) 9.6 7.2

reclassification adjustment for losses (gains) included in net income 2.9 ( 10.2 ) ( 4.5 )

Unrealized (losses) gains on derivatives

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Defined benefit plans:

Net actuarial (losses) gains arising during period ( 4.1 ) ( 6.1 ) 9.4

Net actuarial gains (losses) arising during period 5.3 ( 4.1 ) ( 6.1 )

Amortization of net actuarial loss and curtailment 2.6 3.2 1.7

Defined benefit plans 7.9 ( 0.9 ) ( 4.4 )

Other comprehensive income (loss), before tax

10.6 ( 11.6 ) 6.1

Income tax benefit (expense) related to items of other comprehensive income 0.2 1.0 ( 2.3 )

Other comprehensive income (loss), net of tax

10.8 ( 10.6 ) 3.8

Other comprehensive (loss) income, before tax ( 27.0 ) 10.6 ( 11.6 )

Income tax (expense) benefit related to items of other comprehensive income ( 2.0 ) 0.2 1.0

Other comprehensive (loss) income, net of tax ( 29.0 ) 10.8 ( 10.6 )

COMPREHENSIVE INCOME $ 96.9 $ 192.8 $ 144.8

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130.9 million shares issued and 127.6 million outstanding as of December 29, 2024;

128.0 shares issued and outstanding as of December 25, 2022 )

129.1 million shares issued and 126.8 million outstanding as of December 31, 2023)

Paid-in capital 39.7 17.8

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Restructuring charges, net of cash payments 10.5 ( 9.4 ) 13.0

Amortization of finance fees 2.2 — —

Write-off and amortization of finance fees 8.9 2.2 —

Stock-based compensation 21.9 17.8 10.9

Asset impairment charges — — 46.4

Recognition of actuarial losses 2.9 0.9 0.2

Recognition of actuarial losses and settlement charges 2.7 2.9 0.9

Deferred taxes 4.6 ( 5.7 ) 2.3

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Proceeds from the disposition of assets 14.6 0.4 —

Acquisition of business, net of cash acquired ( 514.5 ) — —

NET CASH USED IN INVESTING ACTIVITIES ( 580.8 ) ( 56.9 ) ( 55.9 )

FINANCING ACTIVITIES

Issuance of long-term and short-term debt 255.0 985.0 —

Repayments of long-term and short-term debt ( 527.5 ) — —

Proceeds from revolving credit facility borrowings 470.0 255.0 235.0

Issuance of long-term debt 700.0 — 750.0

Repayment of revolving credit facility borrowings ( 150.0 ) ( 490.0 ) —

Repayment of term loan ( 712.5 ) ( 37.5 ) —

Payment of financing fees ( 17.8 ) — ( 10.1 )

Repurchase of common stock ( 6.5 ) ( 22.0 ) —

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Dividend to Fortune Brands — — ( 940.0 )

Payment of financing fees — ( 10.1 ) —

( 1.4 ) ( 0.5 ) ( 0.5 )

NET CASH USED IN FINANCING ACTIVITIES ( 299.9 ) ( 215.3 ) ( 109.7 )

Effect of foreign exchange rate changes on cash and cash equivalents ( 1.2 ) ( 4.7 ) 0.1

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ 47.6 $ ( 40.3 ) $ ( 12.9 )

Cash and cash equivalents at beginning of period $ 101.1 $ 141.4 $ 154.3

Cash and cash equivalents at end of period $ 148.7 $ 101.1 $ 141.4

Other items ( 2.2 ) ( 1.4 ) ( 0.5 )

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 269.6 ( 299.9 ) ( 215.3 )

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash ( 7.9 ) ( 1.2 ) ( 4.7 )

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH $ ( 27.1 ) $ 47.6 $ ( 40.3 )

Cash, cash equivalents, and restricted cash at beginning of period $ 148.7 $ 101.1 $ 141.4

Cash, cash equivalents, and restricted cash at end of period $ 121.6 $ 148.7 $ 101.1

Cash and cash equivalents $ 120.6 $ 148.7 $ 101.1

Restricted cash included in other assets 1.0 — —

Total cash, cash equivalents and restricted cash $ 121.6 $ 148.7 $ 101.1

a) Capital expenditures of $ 3.4 million, $ 2.3 million and $ 1.6 million that have not been paid as of December 29, 2024, December 31, 2023 and December 25, 2022, respectively, were excluded from the Consolidated Statements of Cash Flows.

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Balance at December 26, 2021 — $ — $ 272.2 $ — $ ( 3.9 ) $ 2,185.5 $ 2,453.8

Comprehensive income:

Net income — — — — — 182.6 182.6

Other comprehensive income — — — — 3.8 — 3.8

Stock-based compensation — — 9.3 — — — 9.3

Net contributions from Fortune Brands — — 43.7 — — — 43.7

Balance at December 26, 2021 — $ — $ 272.2 $ — $ ( 3.9 ) $ 2,185.5 $ 2,453.8

Distribution of MasterBrand, Inc.

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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 — — — — — 125.9 125.9

Other comprehensive loss — — — — ( 29.0 ) — ( 29.0 )

Stock-based compensation 1.2 — 21.9 ( 11.4 ) — — 10.5

Stock repurchase program ( 0.4 ) — — ( 6.5 ) — — ( 6.5 )

Balance at December 29, 2024 127.6 $ 1.3 $ 39.7 $ ( 44.0 ) $ ( 32.7 ) $ 1,330.4 $ 1,294.7

See Notes to Consolidated Financial Statements.

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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.

References to “MasterBrand,” “the Company,” “we,” “our” and “us” refer to MasterBrand, Inc.

and its consolidated subsidiaries, unless the context otherwise requires.

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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 consolidated financial statements, including Note 5, "Earnings Per Share," have been retroactively recast to reflect the effects of the changes in equity structure resulting from the Reorganization, Separation and Distribution.

All share and per share amounts for the prior period presented in the consolidated financial statements, including Note 6, "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.

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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.

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Basis of Presentation The accompanying financial statements are 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.

We had 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 was derived from Fortune Brands’ consolidated financial statements and accounting records.

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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.

Fiscal 2023 consisted of 53 weeks ended on December 31, 2023 .

Fiscal 2022 and 2021 both consisted of 52 weeks ending on December 25, 2022 and December 26, 2021, respectively.

Fiscal 2024 and 2022 both consisted of 52 weeks ended on December 29, 2024 and December 25, 2022, respectively.

Fiscal 2023 consisted of 53 weeks ending on December 31, 2023.

References herein to years are to our fiscal years.

The consolidated financial statements have been prepared in accordance with GAAP.

The Company has one operating segment based on the nature of products the Company sells, its production and distribution model, the internal management structure and information that is regularly reviewed by the chief executive officer (“CEO”), who is the chief operating decision maker, for the purpose of assessing performance and allocating resources.

The consolidated statements of income include all revenues and costs directly attributable to our business, including costs for facilities, functions and services we utilize.

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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, associate headcount, or number of facilities, as applicable.

Prior to the Separation, total expenses allocated for the 2022 and 2021 years were $ 92.5 million and $ 62.0 million respectively, of which $ 72.4 million and $ 42.3 million, respectively, was not previously allocated to us.

Prior to the Separation, total expenses allocated for the 2022 year were $ 92.5 million, of which $ 72.4 million was not previously allocated to us.

Such amounts are primarily included within selling, general and administrative expenses in the 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 year 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 in the prior year period presented.

Actual costs that we may have incurred during the time period when 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 associates 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 consolidated statements of income also include $ 2.4 million and $ 15.4 million of costs related to the separation from Fortune Brands for the years ended December 31, 2023 and December 25, 2022, respectively.

The consolidated statements of income also include $ 2.4 million of costs related to the separation from Fortune Brands for the year ended December 31, 2023.

The Separation-related costs include advisory fees, professional fees and other transaction related costs incurred directly by us.

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The net income taxes paid on our behalf are payable to Fortune Brands, as provided in the indemnification provisions of the Tax Allocation Agreement.

Accordingly, the net income tax payable of $ 32.6 million to Fortune Brands as of December 25, 2022, was recorded in accounts payable on the Consolidated Balance Sheets and settled in 2023.

Following the Separation, a limited number of services that Fortune Brands provided to us, or we provided to them, prior to the Separation continue to be provided for a period of time under a Transition Services Agreement.

Throughout fiscal 2023, we have incurred 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.

Accordingly, the net income tax payable of $ 32.6 million to Fortune Brands as of December 25, 2022, was recorded in accounts payable on and settled in 2023.

Following the Separation, a limited number of services that Fortune Brands provided to us, or we provided to them, prior to the Separation continued to be provided for a period of time under a transition services agreement.

Subsequent to the Separation, we have incurred 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.

Fortune Brands utilized a central approach to treasury management, and prior to the Separation, we historically participated in related cash pooling arrangements.

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The adjustment did not have any impact on our annual consolidated financial statements for the 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, covered the repair or replacement of the Company’s assets that suffered loss or damage, and the Company worked 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 losses 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.

Tornado at Jackson, Georgia 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 and 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.

No expenses related to the tornado were incurred during our second, third, or fourth quarters of 2023, and we do not expect to incur any additional costs related to this matter.

During 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 are recorded as a component of cost of products sold in the consolidated statements of income.

Upon receipt of the final insurance payment in the fourth quarter, we consider this claim to be closed.

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 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.

Gain on sale of asset On December 12, 2024, the Company sold a warehouse and land located in Weslaco, Texas.

The location was previously closed in conjunction with the consolidation of our warehouse facilities to enable efficiencies and increase annual savings.

This facility sold for a purchase price of $ 6.6 million, resulting in a $ 4.3 million gain recognized as a separate component of non-operating income in the Consolidated Statements of Income.

Significant Accounting Policies

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Income and expenses are translated at the average rates of exchange in effect during the period for the foreign subsidiaries where the local currency is the functional currency.

The related translation adjustments are made directly to a separate component of the AOCI caption in equity.

The related translation adjustments are made directly to a separate component of the accumulated other comprehensive loss caption in equity.

Transactions denominated in a currency other than the functional currency of a subsidiary are translated into the functional currency with resulting transaction gains or losses recorded in other expense, net.

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Income tax liabilities related to unrecognized tax benefits (“UTBs”), including interest and penalties, are reported as a liability within the Consolidated Balance Sheets based upon tax authorities’ ability to assert the Company may be legally liable for UTBs.

For taxable periods ended after the Separation, the Company will file a consolidated U.S.

federal income tax return 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.

For taxable periods ended after the Separation, the Company filed consolidated U.S.

federal income tax returns and various state and local income tax returns.

The Company’s foreign income tax returns continue to be filed on a full-year basis.

The Company is subject to income taxes in the U.S.

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Diluted earnings per common share include the impact of all potentially dilutive securities outstanding during the year.

For comparative purposes, 2021 has been retroactively recast to reflect the effects of the changes in equity structure resulting from the Reorganization, Separation and Distribution and assumes the same basic weighted average shares.

For years prior to the Separation, it is assumed that there are no dilutive securities as there were no stock-based awards of MasterBrand outstanding.

See Note 5, "Earnings Per Share," for further discussion.

Cash and Cash Equivalents We consider all highly liquid investments purchased with a maturity of three months or less to be cash equivalents.

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Inventory costs include direct materials, including freight, labor and manufacturing overhead.

Inventory provisions are recorded to reduce inventory to the net realizable dollar value for obsolete or slow moving inventory based on assumptions about future demand and marketability of products, the impact of new product introductions, inventory levels and turns, product spoilage and specific identification of items, such as product discontinuance, engineering/material changes, or regulatory-related changes.

If actual market conditions differ from our projections, and our estimates prove to be inaccurate, write-downs of inventory values and adjustments to cost of products sold may be required.

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The fair value of a disposal group, less any costs to sell, is assessed each reporting period it remains classified as held for sale and any remeasurement to the lower of carrying value or fair value less costs to sell is reported as an adjustment to the carrying value.

The gain or loss on the sale of assets held for sale are included in non-operating expenses.

Long-lived Assets A long-lived asset (including amortizable identifiable intangible assets) or asset group held for use is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

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Fair value is estimated primarily using discounted expected future cash flows on a market-participant basis.

In 2023, no triggering events were noted related to our goodwill or indefinite-lived tradenames.

However, we did note a triggering event requiring assessment of impairment for certain of our long-lived assets due to a restructuring action, resulting in a $ 4.6 million impairment charge included within restructuring charges.

See Note 12, "Restructuring Charges," for additional information.

In 2022, we concluded we had triggering events requiring assessment of impairment for certain of our long-lived assets due to the impairment of certain indefinite-lived tradenames, as well as specific restructuring actions announced in 2022.

We performed quantitative impairment analyses during the year and determined there were no impairments of long-lived assets through December 25, 2022.

Leases Operating lease assets and operating lease liabilities are recognized based on the present value of the future lease payments over the lease term at commencement date.

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We may also elect to bypass the qualitative testing and proceed directly to the quantitative testing.

Assessing qualitative factors during both 2023 and 2022 would not have resulted in us performing a quantitative impairment test.

In both 2023 and 2022, we elected to bypass the qualitative testing and performed quantitative tests for all goodwill.

Assessing qualitative factors during 2024, 2023 and 2022 would not have resulted in us performing a quantitative impairment test.

In 2024, 2023 and 2022, we elected to bypass the qualitative testing and performed quantitative tests for all goodwill.

For the income approach, we use a discounted cash flow model, estimating the future cash flows of the reporting units to which the goodwill relates and then discounting the future cash flows at a market-participant-derived discount rate based on the weighted-average cost of capital.

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The determination of fair value using this technique requires the use of estimates and assumptions related to forecasted revenue growth rates, the assumed royalty rates and the market-participant discount rates.

During both our 2023 and 2022 annual impairment tests, we elected to quantitatively test all of our indefinite-lived tradenames.

During our 2021 annual impairment test, of our $ 231.8 million indefinite lived tradenames, we tested $ 180.7 million quantitatively, and the remainder was assessed using qualitative factors.

We recognized impairment charges, which are classified as “Asset impairment charges” on our consolidated statements of income, related to certain indefinite-lived tradenames of $ 46.4 million in 2022.

We did not recognize any impairment charges related to indefinite-lived intangible assets in either fiscal 2023 or 2021.

See Note 8, "Goodwill and Identifiable Intangible Assets," for additional information.

Events or circumstances that could have a potential negative effect on the estimated fair value of our reporting units and indefinite-lived tradenames include:

increases in discount rates, lower than forecasted revenues, actual new construction and repair and remodel growth rates that fall below our assumptions, actions of key customers, continued economic uncertainty, higher levels of unemployment, weak consumer confidence, lower levels of discretionary consumer spending, a decrease in royalty rates and decline in the trading price of our common stock.

increases in market-participant discount rates, lower than forecasted revenue growth rates, actual new construction and repair and remodel growth rates that fall below our assumptions, actions of key customers, continued economic uncertainty, higher levels of unemployment, weak consumer confidence, lower levels of discretionary consumer spending, a decrease in assumed royalty rates and a decline in the trading price of our common stock.

We cannot predict the occurrence of certain events or changes in circumstances that might adversely affect the carrying value of goodwill and indefinite-lived assets.

Business Combinations From time to time, the Company acquires businesses and/or assets that augment and complement our operations.

In accordance with ASC 805, “Business Combinations,” these acquisitions are accounted for under the purchase method of accounting.

Under this method, the Company allocates the fair value of purchase consideration transferred to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values on the date of the acquisition.

The excess purchase consideration over the aggregate fair value of tangible and intangible assets, net of liabilities assumed, is recorded as goodwill.

The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

During the measurement period, not to exceed one year from the date of acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date.

After the measurement period, any subsequent adjustments are reflected in the consolidated statements of income.

Acquisition costs, such as legal and consulting fees, are expensed as incurred.

The Company classifies costs incurred in connection with acquisitions and their integration as acquisition-related costs.

These costs are expensed as incurred and consist primarily of transaction costs, legal and consulting fees, and integration costs and are recorded within selling, general and administrative expenses in the consolidated statements of income .

The consolidated financial statements include the results of operations from these business combinations from the date of acquisition.

Derivative Financial Instruments In accordance with ASC requirements for derivatives and hedging, we recognize all derivative contracts as either assets or liabilities on the balance sheet, and the measurement of those instruments is at fair value.

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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 expects to offer 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.

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Actuarial gains or losses related to these assumptions represent the difference between actual and actuarially assumed experience.

We recognize changes in the fair value of pension plan assets and net actuarial gains or losses in other expense, net to the extent they are in excess of 10 percent of the greater of the fair value of pension plan assets or each plan’s projected benefit obligation for each plan (the “corridor”) in earnings immediately upon remeasurement, which is at least annually in the fourth quarter of each fiscal year.

We recognize changes in the fair value of pension plan assets and net actuarial gains or losses in other expense, net to the extent they are in excess of 10 percent of the greater of the fair value of pension plan assets or the plan’s projected benefit obligation (the “corridor”) in earnings immediately upon remeasurement, which is at least annually in the fourth quarter of each fiscal year.

We review our actuarial assumptions on an annual basis and make modifications to the assumptions based on current economic conditions and trends.

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Accounting Standards Issued and Adopted

There are no recently issued accounting pronouncements that we have adopted that had a material impact on our financial position, results of operations or cash flows.

Accounting Standards Issued, But Not Yet Adopted

Improvements to Reportable Segment Disclosures

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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 consolidated financial statements.

Refer to Note 22, "Segment Information," for our implementation of ASU 2023-07.

The adoption of ASU 2023-07 did not have an impact on our consolidated financial position, results of operations or cash flows.

Accounting Standards Issued, But Not Yet Adopted

Improvements to Income Tax Disclosures

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The Company is currently evaluating the impact of adopting this guidance on the consolidated financial statements.

Disaggregation of Income Statement Expenses

In November 2024, the FASB issued ASU 2024-03 to require more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization and depletion) included in certain expense captions presented on the face of the income statement.

This ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The amendments may be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of adopting this guidance on the consolidated financial statements.

Acquisition of Supreme

On July 10, 2024, we acquired all of the issued and outstanding limited liability interests of Dura Investment Holdings LLC, the 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 purchase price 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.

The combined company is reaching more customers, through its highly complementary dealer networks, with greater efficiency and effectiveness.

Through this transaction, MasterBrand broadened its portfolio of premium cabinetry in the resilient and attractive kitchen and bath categories, further diversifying its channel distribution and adding to its strategically located facility footprint.

The acquisition was funded with a combination of cash on hand and proceeds from our revolving credit facility.

The purchase consideration was $ 527.3 million , which was determined as follows:

Dollars presented in millions)

Cash considerations paid to Supreme shareholders $ 336.4

Cash paid for transaction costs of Supreme 13.9

Repayment of Supreme existing indebtedness and accrued interest 178.2

Total Cash Consideration $ 528.5

Purchase price adjustments ( 1.2 )

Total Purchase Consideration $ 527.3

The purchase price of Supreme was allocated on a preliminary basis as of the closing date of July 10, 2024.

Assets acquired and liabilities assumed were recorded at estimated fair values based on management’s estimates, available information and supportable assumptions that management considered reasonable.

Under the acquisition method of accounting, the identifiable assets acquired and liabilities assumed of Supreme are recognized and measured at fair value.

Due to the timing of acquisition close, the preliminary fair value estimates and assumptions are subject to change as we obtain additional information over the measurement period.

Since the initial measurement of the identified assets acquired and liabilities assumed, progress was made in completing certain of our additional valuations and analyses.

As such, we updated our initial allocation of the Merger Consideration that was completed during the third quarter of 2024.

The following table sets forth the allocation of the purchase consideration to the assets acquired and liabilities assumed of Supreme, with the excess recorded to goodwill:

Dollars presented in millions)

Preliminary Net Assets Acquired Initial Purchase Price Allocation Measurement Period Changes Updated Purchase Price Allocation

Cash and cash equivalents $ 11.8 $ — $ 11.8

Accounts receivable 11.5 — 11.5

Inventories 17.3 ( 0.3 ) 17.0

Other current assets 2.1 ( 0.1 ) 2.0

Property, plant and equipment 115.9 ( 0.5 ) 115.4

Operating lease right-of-use assets 17.6 — 17.6

Other intangible assets 256.9 2.3 259.2

Other assets 1.9 — 1.9

$ 435.0 $ 1.4 $ 436.4

Accounts payable $ 7.2 $ — $ 7.2

Current operating lease liabilities 2.4 — 2.4

Other current liabilities 18.0 — 18.0

Deferred income taxes 69.8 ( 0.6 ) 69.2

Operating lease liabilities 15.1 — 15.1

Other non-current liabilities 0.3 0.3 0.6

$ 112.8 $ ( 0.3 ) $ 112.5

Net Assets Acquired $ 322.2 $ 1.7 $ 323.9

Goodwill 204.9 ( 1.5 ) 203.4

Purchase Consideration $ 527.1 $ 0.2 $ 527.3

The estimated value of Property, Plant and Equipment includes adjustments totaling $ 73.2 million to increase the net book value of $ 42.2 million to the preliminary fair value estimate of $ 115.4 million .

This estimate is based on other comparable acquisitions and historical experience, and preliminary expectations as to the duration of time we expect to realize benefits from those assets.

The estimated fair values of identifiable intangible assets acquired were prepared using an income valuation approach, which requires a forecast of expected future cash flows either through the use of the relief-from-royalty method or the multi-period excess earnings method.

The estimated useful lives are based on our historical experience and expectations as to the duration of time we expect to realize benefits from those assets.

We applied significant judgment in determining the fair value of the intangible assets, which involved the use of Level 3 inputs, including estimates and assumptions of forecasted revenue growth rates, estimated earnings, customer attrition rates, assumed royalty rates and market-participant discount rates, as applicable.

The estimated fair values of the identifiable intangible assets acquired, their estimated useful lives and the related valuation methodology are as follows:

Dollars presented in millions)

Asset Type Fair Value Useful Life Valuation Methodology

Customer relationships $ 174.1 17.5 years Multi-period excess earnings

Tradenames 85.1 Indefinite Relief from royalty method

Total other intangible assets $ 259.2

The Company recognized $ 203.4 million of goodwill , of which $ 180.8 million is tax deductible.

The $ 203.4 million of goodwill recognized is attributable to synergies that are expected to enhance and expand the Company’s overall product portfolio and opportunities in new and existing markets, future products that have yet to be determined and Supreme’s assembled workforce.

The Company incurred $ 25.4 million of acquisition-related costs associated with the acquisition for the year ended December 29, 2024 , which are recorded within selling, general and administrative expenses in the consolidated statements of income.

Pro forma financial information

Net sales and earnings related to the operations of Supreme that have been included in our consolidated statements of income for the period from July 10, 2024 to December 29, 2024 are as follows:

Dollars presented in millions)

Net Sales $ 121.2

Net Income $ 1.2

The following table summarizes, on a pro forma basis, the combined results of operations of Supreme and MasterBrand as though the acquisition and the related financing had occurred as of December 26, 2022.

The pro forma results are not necessarily indicative of either the actual consolidated results had the acquisition of Supreme occurred on December 26, 2022, nor are they indicative of future consolidated operating results.

Dollars presented in millions) 2024 2023

Net Sales $ 2,836.4 $ 2,979.6

Net Income $ 140.0 $ 151.8

These pro forma amounts have been calculated after applying our accounting policies and making certain adjustments, which primarily include:

(i) depreciation adjustments relating to fair value step-ups to property, plant and equipment;

(ii) amortization adjustments relating to fair value estimates of acquired intangible assets;

(iii) incremental interest expense associated with the revolving credit facility used, in part, to fund the acquisition, and related debt issuance costs;

(iv) cost of products sold adjustments relating to fair value step-ups to inventory;

and (v) transaction related costs of both MasterBrand and Supreme.

Revenue from Contracts with Customers

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We estimate future product returns at the time of sale based on historical experience and record a corresponding refund obligation, which amounted to $ 1.9 million and $ 2.1 million as of December 29, 2024 and December 31, 2023, respectively.

Refund obligations are classified within other current liabilities in our consolidated balance sheet.

Refund obligations are classified within other current liabilities in our 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.

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Dollars presented in millions) 2024 2023 2022

Net Sales by Channel (a)

Net Sales by Channel

$ 1,421.3 $ 1,446.5 $ 1,771.8

Retailers (c)

Retailers (b)

927.6 967.0 1,173.9

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Net sales $ 2,700.4 $ 2,726.2 $ 3,275.5

a) Net sales by channel presented in fiscal 2022 and 2021 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 this Annual Report on Form 10-K, net sales by channel was presented for our domestic sales only.

b) 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.

c) Represents sales to domestic “Do-It-Yourself” retailers, including our two largest customers:

(a) Represents sales to 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 “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

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Ending balance $ 3.0 $ 4.6

Other Expense, Net

The components of other expense, net for the years ended December 31, 2023, December 25, 2022 and December 26, 2021 were as follows:

Other (Income) Expense, Net

The components of other (income) expense, net for the years ended December 29, 2024, December 31, 2023 and December 25, 2022 were as follows:

Dollars presented in millions) 2024 2023 2022

Pension and postretirement benefits other than pensions $ 4.1 $ 2.9 $ ( 1.3 )

Foreign currency losses 3.2 1.1 1.4

Foreign currency (gains) losses ( 2.0 ) 3.2 1.1

Other items, net ( 4.4 ) ( 3.7 ) 0.8

Total other expense, net $ 2.4 $ 0.6 $ 0.6

Total other (income) expense, net $ ( 2.3 ) $ 2.4 $ 0.6

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, fiscal 2021 has 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 fiscal years ended December 31, 2023 and December 25, 2022 , diluted earnings per share was computed by giving effect to all potentially dilutive stock awards that are outstanding.

For years prior to the Separation, it is assumed that there are no dilutive securities as there were no stock-based awards of MasterBrand outstanding.

For the fiscal years ended December 29, 2024, December 31, 2023 and December 25, 2022 , diluted earnings per share was computed by giving effect to all potentially dilutive stock awards that are 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 fiscal years ended December 29, 2024 , December 31, 2023 and December 25, 2022 :

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Property, plant and equipment, net of accumulated depreciation $ 481.5 $ 356.6

Accounts payable:

Third party $ 149.7 $ 175.1

Fortune Brands (a) 1.7 44.1

Total accounts payable $ 151.4 $ 219.2

Other current liabilities:

Accrued salaries, wages and other compensation $ 54.9 $ 67.6

Accrued restructuring 1.4 15.4

Interest payable 25.5 1.3

Accrued income and other taxes

Accrued product warranties 9.3 12.9

Derivative payable 5.7 0.1

Accrued restructuring 4.9 1.4

Other accrued expenses 80.7 62.5

Total other current liabilities $ 195.2 $ 164.3

(a) The payable to Fortune Brands of $ 44.1 million as of December 25, 2022, included various items Fortune Brands paid on our behalf, for which we owed reimbursement, including income taxes incurred prior to the Separation of $ 32.6 million.

The payable to Fortune Brands is $ 1.7 million at December 31, 2023.

We have operating and finance leases for buildings and certain machinery and equipment.

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Amounts recognized for finance leases as of and for the years ended December 29, 2024 and December 31, 2023 were immaterial.

Operating lease expense recognized in the consolidated statement of income for the years ended 2023, 2022 and 2021 were $ 26.9 million , $ 27.4 million and $ 24.7 million , respectively, including approximately $ 9.4 million, $ 11.7 million and $ 9.4 million of short-term and variable lease costs for the years ended 2023, 2022 and 2021, respectively.

Operating lease expense recognized in the consolidated statements of income for 2024, 2023 and 2022 were $ 29.4 million , $ 26.9 million and $ 27.4 million , respectively, including approximately $ 9.6 million, $ 9.4 million and $ 11.7 million of short-term and variable lease costs for 2024, 2023 and 2022, respectively.

Other information related to leases was as follows for the fiscal years ending:

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Right-of-use assets obtained in exchange for operating lease obligations $ 16.8 $ 23.9 $ 5.2

Right-of-use assets obtained upon Supreme acquisition - July 10, 2024 $ 18.3 $ — $ —

Weighted average remaining lease term—operating leases 5.8 years 5.4 years 5.1 years

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Balance at December 31, 2023

Supreme acquisition 203.4

2024 translation adjustments

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Amortization Net

Indefinite-lived tradenames $ 184.2 $ — $ 184.2 $ 183.1 $ — $ 183.1

Indefinite-lived tradenames (a)

$ 266.1 $ — $ 266.1 $ 184.2 $ — $ 184.2

Amortizable intangible assets

Tradenames 10.0 ( 10.0 ) — 10.4 ( 10.4 ) —

Customer and contractual relationships 363.6 ( 212.3 ) 151.3 362.9 ( 196.8 ) 166.1

Customer and contractual relationships (a)

535.4 ( 230.2 ) 305.2 363.6 ( 212.3 ) 151.3

Patents/proprietary technology 11.0 ( 11.0 ) — 11.0 ( 11.0 ) —

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Total identifiable intangibles $ 822.5 $ ( 251.2 ) $ 571.3 $ 569.2 $ ( 233.7 ) $ 335.5

(a) During the third quarter of 2024, we completed our acquisition of Supreme, acquiring Indefinite-lived tradenames of $ 85.1 million and Customer relationships of $ 174.1 million.

Amortizable intangible assets, principally customer relationships, are subject to amortization on a straight-line basis over their estimated useful life, ranging from 16 to 20 years, based on the assessment of a number of factors that may impact useful life, including customer attrition rates and other relevant factors.

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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.

These downward revisions to forecasted revenue growth rates were not known when recording the impairment charge during the second quarter of 2022.

As of both December 29, 2024 and December 31, 2023, the carrying value of this tradename was $ 46.2 million.

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Events or circumstances that could have a potential negative effect on the estimated fair value of our reporting units and indefinite-lived tradenames include:

increases in discount rates, lower than forecasted revenues, actual new construction and repair and remodel growth rates that fall below our assumptions, actions of key customers,continued economic uncertainty, higher levels of unemployment, weak consumer confidence, higher interest rates, lower levels of discretionary consumer spending, a decrease in royalty rates and a decline in the trading price of our common stock.

increases in market-participant discount rates, lower than forecasted revenue growth rates, actual new construction and repair and remodel growth rates that fall below our assumptions, actions of key customers, continued economic uncertainty, higher levels of unemployment, weak consumer confidence, higher interest rates, lower levels of discretionary consumer spending, a decrease in assumed royalty rates and a decline in the trading price of our common stock.

We cannot predict with certainty the occurrence of certain events or changes in circumstances that might adversely affect the carrying value of goodwill and indefinite-lived assets.

There were no impairments of goodwill for any periods presented.

There was no impairment of goodwill for any period presented.

There were no impairments of indefinite-lived assets for the years ended December 29, 2024 or December 31, 2023.

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The gross U.S.

dollar equivalent notional amount of all foreign currency derivative hedges outstanding at December 31, 2023 was $ 61.3 million, representing a net settlement asset of $ 2.9 million.

Based on foreign exchange rates as of December 31, 2023, we estimate that $ 2.2 million of net derivative gains associated with cash flow hedges and included in accumulated other comprehensive income as of December 31, 2023 will be reclassified to earnings within the next twelve months.

dollar equivalent notional amount of all foreign currency derivative hedges outstanding at December 29, 2024 was $ 88.1 million, representing a net settlement liability of $ 5.7 million.

Based on foreign exchange rates as of December 29, 2024, we estimate that $ 5.0 million of net derivative losses associated with cash flow hedges and included in accumulated other comprehensive income as of December 29, 2024 will be reclassified to earnings within the next twelve months.

The fair values of foreign exchange derivative instruments on the consolidated balance sheets as of December 29, 2024 and December 31, 2023 were:

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Foreign exchange contracts:

Unrealized holding gains arising during period

$ 9.6 $ 7.2 $ 0.5

reclassification adjustment for gains included in net income

Unrealized holding (losses) gains arising during period $ ( 10.1 ) $ 9.6 $ 7.2

reclassification adjustment for losses (gains) included in net income

2.9 ( 10.2 ) ( 4.5 )

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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."

Assets and liabilities measured at fair value on a recurring basis as of December 29, 2024 and December 31, 2023 were as follows:

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Derivative financial instruments are recorded at fair value.

The estimated fair value of the Company's debt, including current maturities, was based on Level 2 inputs, being market quotes or values for similar instruments, and interest rates currently available to the Company for the issuance of debt with similar terms and remaining maturities, at a discount rate for the remaining principal payments.

As of December 29, 2024, the fair value of total debt was $ 1,025.3 million compared to the carrying value of $ 1,020.0 million, excluding deferred financing costs.

As of December 31, 2023, the fair value of total debt was equal to the carrying value of $ 712.5 million, excluding deferred financing costs.

The following table provides a summary of the Company’s debt as of December 29, 2024 and December 31, 2023 , including the carrying value of the debt less debt issuance costs:

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Term loan due November 2027 — — 18.8 693.7

Revolving credit facility due June 2029 — 320.0 — —

7.00 % Senior Notes due 2032

— 1,020.0 18.8 693.7

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Total $ — $ 1,007.8 $ 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”).

Initial proceeds from the 2022 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 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.

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 two quarters 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.

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.

2024 Refinancing Transaction

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 amended and restated 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 acquisition of Supreme on July 10, 2024, and 3) 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 accrues at a rate of 7.00 percent per annum and is 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 December 29, 2024.

As of December 29, 2024, prepaid debt issuance costs related to the Notes were $ 12.2 million and are being amortized over the term of the debt.

These costs are included in long-term debt in our 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 December 29, 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.

The $ 750.0 million Term Loan has quarterly required amortization payments that began in March 2023.

As of December 31, 2023, the Company had $ 480.2 million of availability under its revolving credit facility.

Debt issuance costs related to the 2022 Credit Agreement were $ 10.1 million upon inception of the agreement and are being amortized over the term of the debt.

At December 25, 2022 , $ 0.8 million was included in other current assets, $ 3.2 million is included in other assets, $ 1.3 million is included in the current portion of long-term debt and $ 4.8 million is included in long-term debt in our Consolidated Balance Sheets.

At December 31, 2023 , unamortized debt issuance costs totaled $ 8.0 million of which $ 0.9 million was included in other current assets, $ 2.4 million was included in other assets, $ 1.2 million was included in the current portion of long-term debt and $ 3.5 million was included in long-term debt in our Consolidated Balance Sheets.

During the third quarter of fiscal 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.

We did not make any additional term loan payments during the fourth quarter of fiscal 2023, and as of December 31, 2023 we are paid in advance for our next two scheduled quarterly payments due during the first and second quarters of 2024.

Total amounts outstanding under the term loan as of December 31, 2023 and December 25, 2022 were $ 712.5 million and $ 750.0 million, respectively .

Additionally, the revolving credit facility was paid in full during the third quarter of fiscal 2023 .

The revolving credit facility did not have an outstanding balance as of December 31, 2023, as compared to a balance of $ 235.0 million at December 25, 2022.

Interest rates under these facilities are variable based on the SOFR at the time of the borrowing, and the Company’s net leverage ratio as measured by net leverage to our 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.

As of December 31, 2023, the net leverage ratio may not exceed 3.75 to 1.0.

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.

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 December 31, 2023 and December 25, 2022 .

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.

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 December 29, 2024.

The revolving credit facility had an outstanding balance of $ 320.0 million as of December 29, 2024 and had $ 405.4 million of availability.

Availability under the $ 750.0 million revolving credit facility is reduced by the outstanding balance under the revolving credit facility and outstanding letters of credit.

As of December 29, 2024, prepaid debt issuance costs related to the 2024 Credit Agreement were $ 4.6 million and are being amortized over the term of the debt.

At December 29, 2024, these costs are included in other assets in our consolidated balance sheets.

Over the next five years, debt due to be paid by the Company is as follows:

Dollars presented in millions) Future Debt Payments

Interest paid on debt was $ 64.0 million and $ 0.3 million in 2023 and 2022, respectively.

During the fourth quarter of 2022, we incurred indebtedness in connection with the Separation and Distribution, which resulted in the recognition of interest expense.

Prior to the Separation, we had no third-party borrowings.

Thereafter $ 700.0

Interest paid on debt was $ 41.7 million, $ 64.0 million and $ 0.3 million in 2024, 2023 and 2022, respectively.

We did not recor d any material capitalized interest during 2024, 2023 or 2022.

Restructuring Charges

Restructuring charges of $ 10.1 million in 2023 are primarily related to severance costs and other associate-related costs in order to better align our workforce with our forecasted demand within our manufacturing footprint, and an asset impairment charge associated with a decision to permanently close our Newton, Kansas manufacturing facility, which had previously been idled.

Restructuring charges of $ 25.1 million in 2022 are largely related to severance costs and other associate-related costs associated with the relocation and closure of certain production facilities within our manufacturing footprint, resulting in a more flexible facility footprint.

These actions included the consolidation of two manufacturing facilities in Winnipeg, Canada into one facility, the idling of a manufacturing facility in Newton, Kansas, and the closure of our Lynchburg, Virginia manufacturing facility.

Restructuring charges of $ 4.2 million in 2021 are largely related to severance costs and costs associated with closing a facility.

Restructuring charges of $ 18.0 million in 2024 are largely related to severance costs and other associate-related costs in order to better align our workforce with our forecasted demand within our manufacturing footprint.

2024 restructuring charges also include an asset impairment charge associated with the decision to exit a leased manufacturing facility.

Reconciliation of Restructuring Liability

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(a) Cash expenditures primarily related to severance charges.

Reconciliation of Restructuring Liability

Dollars presented in millions) Balance at December 25, 2022 2023

Cash Expenditures (a)

Balance at December 25, 2022

Non-cash Writeoffs Balance at December 31, 2023

Workforce reduction costs $ 15.3 $ 3.6 $ ( 17.6 ) $ — $ 1.3

Facility Closure Costs — 4.6 — ( 4.6 ) —

Other 0.1 1.9 ( 1.9 ) — 0.1

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(a) Cash expenditures primarily related to severance charges.

For taxable periods prior to and including the Separation, our operations were included in the consolidated U.S.

These actions included the consolidation of two manufacturing facilities in Winnipeg, Canada into one facility, the idling of a manufacturing facility in Newton, Kansas and the closure of our Lynchburg, Virginia manufacturing facility.

For taxable periods prior to and including the Separation in 2022, our operations were included in the consolidated U.S.

federal and certain state and local income tax returns of Fortune Brands, as applicable.

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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 foreign income tax returns 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.

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Income before income taxes $ 168.3 $ 238.7 $ 213.4

Income tax expense in the consolidated statement of income consisted of the following:

Income tax expense in the consolidated statements of income consisted of the following:

Dollars presented in millions) 2024 2023 2022

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federal statutory income tax rate 0.9 0.6 ( 0.4 )

Valuation allowance 1.6 ( 0.1 ) —

Unrecognized tax benefits ( 0.4 ) — ( 6.6 )

IRS audit adjustments — — 8.1

Foreign legislative exclusion ( 1.1 ) — —

Miscellaneous other, net 0.9 0.1 0.8

1 unchanged sentence

For 2024, the Company’s effective tax rate was 25.2 percent, compared to an effective tax rate of 23.8 percent for 2023.

The increase in effective tax rate was primarily the result of an increase in the valuation allowance, nondeductible transaction costs related to the Supreme acquisition and foreign income inclusions net of foreign tax credits, partially offset by foreign exclusions, return-to-provision adjustments and the release of specific uncertain tax positions.

The 2024 effective income tax rate of 25.2 percent compared to the U.S.

federal statutory rate of 21.0 percent was unfavorably impacted by net changes in state and local income taxes, foreign income taxed at higher rates, an increase in the valuation allowance, nondeductible transaction costs related to the Supreme acquisition and executive compensation.

These were partially offset by favorable benefits for the partial release of uncertain tax positions, return-to-provision adjustments, tax credits and foreign exclusions.

The 23.8 percent effective income tax rate for 2023 was unfavorably impacted by net changes in state and local income taxes and foreign income taxed at higher rates.

For 2023, the Company’s effective tax rate was 23.8 percent, compared to an effective tax rate of 27.2 percent for 2022.

The decrease in effective tax rate in 2023 was primarily the result of changes in state and local income taxes and the nonrecurrence of IRS audit adjustments in 2022, including recognition of a deferred tax liability for earnings of various foreign entities, partially offset by benefits for the release of uncertain tax positions in 2022 and foreign income taxed at higher rates.

The 2023 effective income tax rate of 23.8 percent was unfavorably impacted by net changes in state and local income taxes, and foreign income taxed at higher rates.

The 27.2 percent effective income tax rate for 2022 was unfavorably impacted by IRS audit adjustments, including recognition of a deferred tax liability for earnings of various foreign entities, and state and local income taxes, partially offset by favorable benefits for the release of uncertain tax positions and foreign income taxed at lower rates.

For 2022, the Company’s effective tax rate was 27.2 percent, compared to an effective tax rate of 23.4 percent for 2021.

The increase in effective tax rate was primarily the result of state and local income taxes and IRS audit adjustments, including recognition of a deferred tax liability for earnings of various foreign entities, partially offset by increased benefits for the release of uncertain tax positions and foreign income taxed at lower rates.

The 23.4 percent effective income tax rate for 2021 was unfavorably impacted by state and local income taxes and increases in uncertain tax positions that were partially offset by a favorable benefit for foreign income taxed at lower rates.

Deferred income tax assets and liabilities are provided for the impact of temporary differences between amounts of assets and liabilities recognized for financial reporting purposes and the bases of such assets and liabilities as measured by tax laws.

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Deferred tax assets:

Compensation and benefits $ 15.9 $ 14.6

Other accrued expenses $ 14.4 $ 14.7

Accounts receivable 12.5 18.8

Operating lease liabilities 14.3 11.0

Capitalized inventories 4.2 6.0

Net operating loss and other tax carryforwards 11.2 3.2

Accounts receivable 11.1 12.5

R&D capitalization 10.2 7.9

Interest carryforward 9.6 —

Compensation and benefits 8.1 15.9

Capitalized inventories 4.8 4.2

Defined benefit plans 0.2 1.1

Valuation allowance ( 1.0 ) ( 1.2 )

Other 0.4 0.8

Valuation allowance ( 3.7 ) ( 1.0 )

Total deferred tax assets 80.6 70.3

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Prepaid marketing ( 3.0 ) ( 3.0 )

Unremitted earnings of foreign subsidiaries — ( 0.2 )

Other ( 0.2 ) ( 0.4 )

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Net deferred tax liability $ ( 155.8 ) $ ( 79.9 )

As of December 31, 2023 and December 25, 2022 , the Company had deferred tax assets related to net operating losses and other tax credit carryforwards of $ 3.2 million and $ 2.4 million , respectively.

The net operating losses expire between 2024 and 2043, and the tax credit carryforwards expire between 2029 and 2032.

As of December 29, 2024 and December 31, 2023 , the Company had deferred tax assets related to net operating losses and other tax credit carryforwards of $ 11.2 million and $ 3.2 million , respectively, including foreign tax credit carryforwards of $ 8.7 million and $ 2.0 million, respectively.

The net operating losses expire between 2024 and 2043, foreign tax credits expire between 2029 and 2034 and the other tax credit carryforwards expire between 2033 and 2034.

R&D capitalization commenced in 2022 and pertains to the 2017 Tax Cuts and Jobs Act eliminating the immediate expensing of research and experimental expenditures and requiring taxpayers to capitalize their expenditures over a period of years.

The Company evaluated its ability to realize tax benefits associated with deferred tax assets and concluded, based on all available positive and negative evidence, that it is more likely than not that a portion of the deferred tax assets are not expected to be realized.

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Gross unrecognized tax benefits $ 1.0 $ 1.6 $ 1.7

In the fourth quarter of 2023, the Company released $ 0.3 million of prior year tax positions due to statute of limitations.

In the third quarter of 2022, the IRS completed its examination of the Company’s tax filings for 2017 and 2018.

In 2024 and 2023, the Company released $ 0.4 million and $ 0.3 million of prior year tax positions due to the expiration of the statute of limitations, respectively.

In 2022, the IRS completed its examination of the Company’s tax filings for 2017 and 2018.

As a result of closing the IRS examination and other changes to UTBs, the Company realized a $ 19.0 million net reduction in UTBs, which was partially offset by related tax expenses to adjust current and deferred income tax liabilities.

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The Company classifies interest and penalty accruals related to UTBs as income tax expense.

In 2023, the Company recognized interest and penalty expense of approximately $ 0.2 million.

In both 2022 and 2021, the Company recognized interest and penalty expenses of approximately $ 0.1 million.

In 2024, the Company recognized interest and penalty benefit of approximately $ 0.2 million.

In 2023 and 2022, the Company recognized interest and penalty expenses of approximately $ 0.2 million and $ 0.1 million, respectively.

The amount of UTBs that, if recognized as of December 29, 2024, would affect the Company’s effective tax rate is $ 0.5 million.

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However, the plan has been frozen to new participants and benefit accruals were frozen for active participants on or before December 31, 2016.

In addition, the Company provides postretirement health care and life insurance benefits to certain retirees.

In addition, the Company provides postretirement health care and life insurance benefits to certain associates in Mexico.

Service cost for 2024 and 2023 relates to benefit accruals for an associate group in Mexico who receive statutorily-mandated retiree health and welfare benefits.

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During 2024, the Company expects to offer a lump-sum benefit payout option to certain plan participants.

During 2024, the Company offered a lump-sum benefit payout option to certain plan participants, resulting in $ 41.9 million of payments to participants who elected this option, equivalent to approximately 34 percent of the Company’s benefit obligation for the plan.

Due to the size of the lump-sum distribution, in accordance with U.S.

GAAP, the Company was required to recognize a non-cash settlement charge of $ 2.9 million in the fourth quarter of 2024.

During 2025, we expect to complete the purchase of group annuity contracts that will transfer any remaining pension benefit obligation to an insurance company.

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Interest cost 5.4 6.5 0.3 0.3

Actuarial loss (gain)

7.9 ( 41.1 ) 0.5 0.4

Actuarial (gain) loss ( 10.7 ) 7.9 0.2 0.5

Benefits paid ( 6.2 ) ( 7.7 ) ( 0.1 ) ( 0.2 )

Lump sum benefits paid ( 41.9 ) — — —

Settlements/Curtailments gain

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Benefits paid ( 6.2 ) ( 7.7 ) ( 0.1 ) ( 1.0 )

Lump sum benefits paid ( 41.9 ) — — —

Fair value of plan assets at end of year $ 81.5 $ 131.1 $ — $ —

Funded status (Fair value of plan assets less PBO) $ ( 0.7 ) $ ( 4.5 ) $ ( 3.7 ) $ ( 4.1 )

For the year ended December 31, 2023, the actuarial loss is primarily due to declining discount rates and the decision to terminate the plan, which resulted in the adoption of plan termination assumptions that results in an increase to the liability.

For the year ended December 29, 2024, the gain on the pension obligation is primarily due to a combination of increasing discount rates and the actuarial gains from lump sum payments made from the plan during the year.

These liability losses were offset slightly by asset returns greater than expected.

For the year ended December 25, 2022, the actuarial gain is primarily a result of the difference in the expected long-term rate of return compared to the actual return on plan assets.

The accumulated benefit obligation exceeds the fair value of the pension plan assets.

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Net amount recognized $ ( 0.7 ) $ ( 4.5 ) $ ( 3.7 ) $ ( 4.1 )

As of December 31, 2023, we utilized the Society of Actuaries’ base MP-2021 mortality projection scale without adjustment, resulting in an immaterial increase in plan benefit obligation and ongoing expenses.

As of December 29, 2024 and December 31, 2023, we utilized the Society of Actuaries’ base MP-2021 mortality projection scale without adjustment.

As of December 25, 2022, we utilized an aggregate Pri-2012 mortality table with the Society of Actuaries’ MP-2021 projection scale and an adjustment to reflect increased rates of mortality subsequent to the Society of Actuaries’ MP-2021 projection scale, resulting in an immaterial decrease in plan benefit obligation and ongoing expenses.

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Current year actuarial loss

Current year net actuarial gain due to curtailment

Net actuarial loss at December 31, 2023 $ 13.5 $ 0.2

Recognition of actuarial loss

( 2.9 ) ( 0.3 )

Current year actuarial loss 3.6 0.5

Recognition of actuarial (loss) gain ( 2.8 ) 0.2

Current year actuarial gain ( 5.0 ) ( 0.3 )

Net actuarial loss at December 29, 2024 $ 5.7 $ 0.1

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Expected return on plan assets ( 4.1 ) ( 7.1 ) ( 7.3 ) — — —

Recognition of actuarial losses 2.9 0.2 — — 0.7 0.2

Recognition of actuarial (gains) losses ( 0.2 ) 2.9 0.2 — — 0.7

Settlement/Curtailment loss/(gain)

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Total $ 81.5 $ 131.1

A reconciliation of Level 3 measurements was as follows:

Group annuity/

Dollars presented in millions) 2023 2022

Beginning of year $ — $ 4.8

Assets liquidated — ( 4.8 )

End of year $ — $ —

Our defined benefit plan Master Trust owns a variety of investment assets.

All of these investment assets, except for group annuity/insurance contracts which were liquidated during our 2022 fiscal year as shown in the table above, are measured using net asset value per share as a practical expedient per ASC 820.

All of these investment assets are measured using net asset value per share as a practical expedient per ASC 820.

Following the retrospective adoption of ASU 2015-07 (Fair Value Measurement (Topic 820):

Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share) we excluded all investments measured using net asset value per share in the amount of $ 81.5 million and $ 131.1 million as of December 29, 2024 and December 31, 2023, respectively, from the tabular fair value hierarchy disclosure.

The terms and conditions for redemptions vary for each class of the investment assets valued at net asset value per share as a practical expedient.

Real estate assets may be redeemed quarterly with a 105 day redemption notice period.

Investment assets in multi-strategy hedge funds have a 1-year lockup with a 95 day redemption notice period.

Equity, fixed income and cash and cash equivalents have no specified redemption frequency and notice period and may be redeemed daily.

Investment assets as of December 29, 2024, consisting of fixed income funds and cash and cash equivalents, have no specified redemption frequency and notice period, and may be redeemed daily.

As of December 29, 2024, we did not have an intent to sell or otherwise dispose of these investment assets at prices different than the net asset value per share.

Our investment strategy is to optimize investment returns through a diversified portfolio of investments, taking into consideration underlying plan liabilities and asset volatility.

The defined benefit asset allocation policy of the plan allows for an equity allocation of up to 75 percent, a fixed income allocation of 25 percent to 100 percent, a cash allocation of up to 25 percent and other investments of up to 20 percent.

Asset allocations are based on the underlying liability structure.

All retirement asset allocations are reviewed periodically to ensure the allocation meets the needs of the liability structure.

Our investment strategy is to protect the funded status of the defined benefit plan with a portfolio of fixed income investments and cash which is designed to offset changes in the plan’s liabilities related to changes in the discount rate.

The asset allocation policy of the plan allows for liability-hedging assets, including fixed income funds and cash.

Asset allocations are reviewed periodically to ensure the allocation meets the needs of the liability structure.

Our 2025 expected blended long-term rate of return on plan assets of 4.5 percent was determined based on the nature of the plans’ investments, our current asset allocation and projected long-term rates of return from pension investment consultants.

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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, and where appropriate, these actions are being vigorously contested.

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.

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The Company regularly undergoes tax audits in various jurisdictions in which our products are sold or manufactured.

In the future, such costs or an unfavorable outcome could have a material impact on our consolidated results of operations.

In the future, costs related to such audits or an unfavorable outcome could have a material impact on our 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.

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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 have reserved an immaterial amount related to the 2018 tax year audit as our best estimate of our probable liability.

We reserved an immaterial amount related to the 2018 tax year audit as our best estimate of our probable liability as of December 29, 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.

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Performance Share Awards

Performance share awards were granted to officers and certain associates of the Company and represent the right to earn shares of MasterBrand, Inc.

Performance share awards (“PSAs”) have been granted to officers and certain associates of the Company and represent the right to earn shares of MasterBrand, Inc.

common stock based on the achievement of their company-wide non-GAAP performance conditions, including average adjusted return on net tangible assets and cumulative adjusted EBITDA during the three-year performance period.

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As of December 25, 2022, there were no unvested performance share awards outstanding that had been awarded under the Fortune Brands’ Long-Term Incentive Plans.

During the first quarter of fiscal 2023, we granted 411,647 performance share awards.

During 2024, we granted 562,587 PSAs.

During 2023, we granted 411,647 performance share awards.

The following table summarizes activity with respect to performance share awards outstanding under the MasterBrand, Inc.

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Non-vested at December 31, 2023

402,315 $ 9.92

Granted 562,587 $ 17.05

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The remaining unrecognized pre-tax compensation cost related to PSAs at December 29, 2024 was approximately $ 9.9 million (based on the current estimated probability of meeting performance targets), and the weighted-average period of time over which this cost will be recognized is 2.15 years.

The fair value of PSAs that vested during 2023 was $ 0.1 million.

The fair value of PSAs that vested during 2024, 2023 and 2022 were $ 0.1 million, $ 0.1 million and $ 1.5 million, respectively.

The weighted-average grant date fair value of PSAs that were granted during 2024 and 2023 were $ 17.05 and $ 9.91 , respectively.

There were no PSAs granted in 2022.

Restricted Stock Units

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Compensation cost is recognized over the service period.

We calculate the fair value of each RSU granted by using the average of the high and low share prices on the date of grant.

We calculate the fair value of each RSU granted by using the average of the high and low stock price on the date of grant.

The following table summarizes activity with respect to RSUs outstanding under the MasterBrand, Inc.

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The fair value of RSUs that vested (including RSUs that had been awarded under the Fortune Brands’ Long-Term Incentive Plans that vested prior to the Separation) during 2024, 2023 and 2022 was $ 29.5 million, $ 10.6 million and $ 6.1 million, respectively.

The weighted-average grant date fair value of RSUs that were granted during 2024, 2023 and 2022 were $ 17.58 , $ 10.28 and $ 7.88 , respectively.

Stock Option Awards

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(b) At December 29, 2024 the weighted-average remaining contractual life of options exercisable was 5.5 years (as compared to 6.2 years at December 31, 2023) and the aggregate intrinsic value of options exercisable was $ 6.4 million (as compared to $ 6.0 million at December 31, 2023).

The remaining unrecognized compensation cost related to unvested awards at December 31, 2023 was $ 0.4 million , and the weighted-average period of time over which this cost will be recognized is 0.74 years.

The remaining unrecognized compensation cost related to unvested awards at December 29, 2024 was immaterial , and the weighted-average period of time over which this cost will be recognized is 0.17 years.

The fair value of options that vested (including stock options that had been awarded under the Fortune Brands’ Long-Term Incentive Plans that vested prior to the Separation) during the years ended 2024, 2023 and 2022 was $ 0.8 million , $ 1.4 million and $ 0.8 million , respectively.

No options were exercised in 2024, 2023 or 2022.

The intrinsic value of stock options exercised in 2021 was $ 2.6 million .

Accumulated Other Comprehensive Loss

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Amounts classified into accumulated other comprehensive (loss) income ( 9.9 ) 7.2 ( 4.5 ) ( 7.2 )

( 0.9 ) 0.5 7.1 6.7

Amounts reclassified into earnings — ( 4.5 ) 1.1 ( 3.4 )

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Balance at December 25, 2022 $ ( 8.0 ) $ 2.8 $ ( 9.3 ) $ ( 14.5 )

Amounts classified into accumulated other comprehensive (loss) income ( 9.9 ) 7.2 ( 4.5 ) ( 7.2 )

Amounts classified into accumulated other comprehensive income (loss) 12.1 9.6 ( 3.1 ) 18.6

Amounts reclassified into earnings — ( 10.2 ) 2.4 ( 7.8 )

Net current period other comprehensive (loss) income

( 9.9 ) 2.7 ( 3.4 ) ( 10.6 )

Net current period other comprehensive income (loss) 12.1 ( 0.6 ) ( 0.7 ) 10.8

Balance at December 31, 2023 $ 4.1 $ 2.2 $ ( 10.0 ) $ ( 3.7 )

Amounts classified into accumulated other comprehensive (loss) income ( 27.7 ) ( 10.1 ) 4.0 ( 33.8 )

12.1 9.6 ( 3.1 ) 18.6

Amounts reclassified into earnings — 2.9 1.9 4.8

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Balance at December 29, 2024 $ ( 23.6 ) $ ( 5.0 ) $ ( 4.1 ) $ ( 32.7 )

The amounts recorded in accumulated other comprehensive loss for the years ended December 31, 2023, December 25, 2022, and December 26, 2021 were as follows:

Dollars presented in millions)

Details about Accumulated Other

Comprehensive Loss Components 2023 2022 2021

Foreign currency translation adjustments

$ 12.1 $ ( 9.9 ) $ ( 0.9 )

— — — Tax expense

$ 12.1 $ ( 9.9 ) $ ( 0.9 ) Net of tax

Cash flow hedges

Unrealized holding gains arising during period

$ 9.6 $ 7.2 $ 0.5

— — — Tax expense

$ 9.6 $ 7.2 $ 0.5 Net of tax

Pension and Other Postretirement Plans items

Net actuarial (losses) gains arising during period

$ ( 4.1 ) $ ( 6.1 ) $ 9.4

1.0 1.6 ( 2.3 ) Tax benefit (expense)

$ ( 3.1 ) $ ( 4.5 ) $ 7.1 Net of tax

Total amounts recorded in accumulated other comprehensive loss for the period

$ 18.6 $ ( 7.2 ) $ 6.7 Net of tax

The reclassifications out of accumulated other comprehensive loss for the years ended December 31, 2023, December 25, 2022, and December 26, 2021 were as follows:

Dollars presented in millions)

Details about Accumulated Other

Comprehensive Loss Components 2023 2022 2021 Affected Line Item in the Consolidated Statements of Income

Cash flow hedges

Reclassification adjustment for gains included in net income

$ ( 10.2 ) $ ( 4.5 ) $ ( 2.9 ) Cost of products sold

— — — Tax expense

$ ( 10.2 ) $ ( 4.5 ) $ ( 2.9 ) Net of tax

Pension and Other Postretirement Plans items

Amortization of net actuarial loss and curtailment

$ 3.2 $ 1.7 $ — Other expense, net

( 0.8 ) ( 0.6 ) — Tax benefit

$ 2.4 $ 1.1 $ — Net of tax

Total reclassifications for the period $ ( 7.8 ) $ ( 3.4 ) $ ( 2.9 ) Net of tax

Stock Repurchase Program

On May 9, 2023, 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.

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.

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During fiscal 2024, we repurchased 371,499 shares of our common stock under this program at a cost of approximately $ 6.5 million, or an average of $ 17.58 per share.

During 2023 we repurchased 1,874,806 shares of our common stock under this program at a cost of approximately $ 22.0 million, or an average of $ 11.73 per share.

As of December 29, 2024, $ 21.5 million remained authorized for purchase under our stock repurchase program.

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After the Separation, Fortune Brands is not considered a related party of MasterBrand, Inc.

Fortune Brands performed, and continues to perform in some 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.

Fortune Brands performed 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, associate headcount, or number of facilities, as applicable.

Prior to the Separation, total expenses allocated for the 2022 and 2021 years were $ 92.5 million and $ 62.0 million, respectively, and such amounts are primarily included within selling, general and administrative expenses in the Consolidated Statements of Income.

These amounts include costs of $ 72.4 million and $ 42.3 million for the 2022 and 2021 years, respectively, 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 periods presented.

Prior to the Separation, total expenses allocated for 2022 were $ 92.5 million, and such amounts are primarily included within selling, general and administrative expenses in the Consolidated Statements of Income.

These amounts include costs of $ 72.4 million 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 the period 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 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 associates and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology and infrastructure.

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Prior to the Separation, our associates 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 consolidated statements of income.

Prior to the Separation, stock-based compensation costs related to our associates for 2022 and 2021 were $ 10.9 million and $ 9.3 million, respectively.

Prior to the Separation, stock-based compensation costs related to our associates for 2022 were $ 10.9 million.

All of these amounts, except for $ 0.7 million of incremental compensation expense recognized in the fourth quarter of 2022, as described in Note 18, "Stock-Based Compensation," are included within the total expenses allocated, as noted above.

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Balances Due to and From Related Parties

Prior to Separation, the related party note receivable balance was the amount owed to the Company and its subsidiaries from Fortune Brands.

Prior to Separation, the amount owed to the Company and its subsidiaries from Fortune Brands was included in the related party note receivable balance.

We had written interest-bearing loan agreements in place with Fortune Brands.

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The note bore interest at rates ranging between 1.20 percent and 5.05 percent during 2022.

The Company received interest income on related party receivables of $ 14.4 million and $ 5.2 million for 2022 and 2021 , respectively.

Additionally, the Company incurred interest expense on intercompany payables and notes of $ 1.5 million and $ 0.6 million for 2022 and 2021, respectively.

The Company received interest income on related party receivables of $ 14.4 million for 2022 .

Additionally, the Company incurred interest expense on intercompany payables and notes of $ 1.5 million for 2022.

Segment Information

The Company has one operating and reportable segment that is organized based on the nature of products the Company sells, its production and distribution mode, the internal management structure and information that is regularly provided to the chief operating decision maker (“CODM”) for the purpose of assessing performance and allocating resources.

Products sold from which the Company derives revenue are described within Note 1, "Background and Basis of Presentation." Our production and distribution modes were determined to be a single reportable segment as discrete financial information by sale distribution channel and by customer shipping location is limited to sale-related metrics, as disclosed in Note 4, "Revenue from Contracts with Customers."

Our chief executive officer is our CODM.

The CODM uses net income predominantly in the annual budget and forecasting process.

The CODM considers budget-to-actual variances on a monthly basis from net income when making decisions about allocating capital resources to the operating segment.

The CODM also uses net income for evaluating the performance of the operating segment and in determining the compensation of certain employees.

The following summarizes the significant and other operating expenses reviewed by the CODM:

Dollars presented in millions) 2024 2023 2022

Net sales $ 2,700.4 $ 2,726.2 $ 3,275.5

Raw materials 962.3 988.1 1,367.1

Production labor and overhead 861.1 836.7 967.9

Non-production associate-related costs 199.2 196.2 156.3

Distribution costs 161.8 169.4 209.8

Commissions 47.2 48.4 65.7

Amortization of intangibles 20.2 15.3 17.2

Other segment items (a)

212.9 165.8 275.3

Interest expense 74.0 65.2 2.2

Gain on sale of asset ( 4.3 ) — —

Other income (expense), net ( 2.3 ) 2.4 0.6

Income tax expense 42.4 56.7 58.0

Consolidated net income $ 125.9 $ 182.0 $ 155.4

(a) Other segment items include outside service costs, acquisition-related costs, restructuring charges and other expenses.

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The CODM does not review segment assets at a different asset level or category.

Report of Independent Registered Public Accounting Firm

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Supreme from its assessment of internal control over financial reporting as of December 29, 2024, because it was acquired by the Company in a purchase business combination during 2024.

We have also excluded Supreme from our audit of internal control over financial reporting.

Supreme is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent approximately 6% and 4% respectively, of the related consolidated financial statement amounts as of and for the year ended December 29, 2024.

Definition and Limitations of Internal Control over Financial Reporting

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Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Quantitative Impairment Tests – Certain Indefinite-Lived Tradenames

As described in Notes 2 and 8 to the consolidated financial statements, the Company’s consolidated indefinite-lived tradenames balance was $184.2 million as of December 31, 2023, which included two tradenames with remaining carrying values of $46.2 million and $19.1 million, for which a quantitative impairment test was performed.

As described in Notes 2 and 9 to the consolidated financial statements, the Company’s consolidated indefinite-lived tradenames balance was $266.1 million as of December 29, 2024, a portion of which relates to certain tradenames.

Management reviews indefinite-lived tradenames for impairment annually in the fourth quarter and whenever market or business events indicate there may be a potential impairment of that intangible.

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Fair value is measured by management using the relief-from-royalty approach.

Significant assumptions inherent in estimating fair values include forecasted revenue growth rates, assumed royalty rates and market-participant discount rates.

The principal considerations for our determination that performing procedures relating to the quantitative impairment test for certain tradenames is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of the tradenames;

Significant assumptions inherent in estimating the fair values include forecasted revenue growth rates, assumed royalty rates and market-participant discount rates.

The principal considerations for our determination that performing procedures relating to the quantitative impairment tests for certain indefinite-lived tradenames is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of certain tradenames;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s indefinite-lived tradename impairment tests, including controls over the valuation of the Company’s indefinite-lived tradenames.

These procedures also included, among others, (i) testing management’s process for developing the fair value estimates of the two tradenames requiring a quantitative annual impairment test, (ii) evaluating the appropriateness of the relief-from-royalty approach;

These procedures included testing the effectiveness of controls relating to management’s quantitative impairment tests for indefinite-lived tradenames, including controls over the valuation of certain indefinite-lived tradenames.

These procedures also included, among others, (i) testing management’s process for developing the fair value estimates of certain tradenames;

(ii) evaluating the appropriateness of the relief-from-royalty approach used by management;

(iii) testing the completeness and accuracy of underlying data used in the relief-from-royalty approach;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to forecasted revenue growth rates, market-participant discount rates, and assumed royalty rates.

Evaluating management’s significant assumptions related to forecasted revenue growth rates and assumed royalty rates involved evaluating whether the significant assumptions used by management were reasonable considering, (i) the current and past performance of the business associated with the tradenames;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to forecasted revenue growth rates, market-participant discount rates, and assumed royalty rates for certain tradenames.

Evaluating management’s significant assumptions related to forecasted revenue growth rates and assumed royalty rates involved evaluating whether the significant assumptions used by management for certain tradenames were reasonable considering, (i) the current and past performance of the business associated with certain tradenames;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the Company’s relief-from-royalty approach and (ii) the reasonableness of the assumed market-participant discount rate and royalty rate significant assumptions.

Acquisition of Supreme – Valuation of Customer Relationships and Tradenames

As described in Note 3 to the consolidated financial statements, on July 10, 2024, the Company completed the acquisition of Dura Investment Holdings, LLC, the parent company of Supreme Cabinetry Brands, Inc.

(“Supreme”) for purchase consideration of $527.3 million.

Of the acquired intangible assets, $174.1 million of customer relationships and $85.1 million of tradenames were recorded.

Fair value is estimated by management using an income valuation approach, which requires a forecast of future cash flows through the use of the multi-period excess earnings method or the relief-from royalty method.

The valuation methodologies used for the customer relationships and tradenames were the multi-period excess earnings method and the relief from royalty method, respectively.

Management applied significant judgment in determining the fair value of the customer relationship intangible assets, including estimates and assumptions of forecasted revenue growth rates, estimated earnings, customer attrition rates, and market-participant discount rates.

Management applied significant judgment in determining the fair value of the tradename intangible assets, including estimates and assumptions of forecasted revenue growth rates, assumed royalty rates and market-participant discount rates.

The principal considerations for our determination that performing procedures relating to the valuation of customer relationships and tradenames acquired in the acquisition of Supreme is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the customer relationships and tradenames acquired;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to forecasted revenue growth rates, estimated earnings, customer attrition rates, and market-participant discount rates for customer relationships and forecasted revenue growth rates, assumed royalty rates, and market-participant discount rates for tradenames;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the customer relationships and tradenames acquired.

These procedures also included, among others (i) reading the purchase agreement;

(ii) testing management’s process for developing the fair value estimate of the customer relationships and tradenames acquired;

(iii) evaluating the appropriateness of the multi-period excess earnings and relief from royalty methods used by management;

(iv) testing the completeness and accuracy of the underlying data used in the multi-period excess earnings and relief from royalty methods;

and (v) evaluating the reasonableness of the significant assumptions used by management related to forecasted revenue growth rates, estimated earnings, customer attrition rates, and market-participant discount rates for customer relationships and forecasted revenue growth rates, assumed royalty rates, and market-participant discount rates for tradenames.

Evaluating management’s assumptions related to forecasted revenue growth rates for customer relationships and tradenames, assumed royalty rates for tradenames, estimated earnings and customer attrition rates for customer relationships involved considering (i) the current and past performance of the Supreme business;

(ii) the consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the multi-period excess earnings and relief from royalty methods and (ii) the reasonableness of the market-participant discount rate assumption for customer relationships and the assumed royalty rate and market-participant discount rate assumptions for tradenames.

/s/ PricewaterhouseCoopers LLP

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What changed 10-K

Item 8. Financial Statements and Supplementary Data