MasterBrand, Inc. 10-Q

Item 1. FINANCIAL STATEMENTS (Unaudited) MasterBrand, Inc. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) 13 Weeks Ended (U.S. Dollars presented in millions, except per share amounts) March 30, 2025 March 31, 2024 NET SALES $ 660.3 $ 638.1 Cost of products sold 458.1 433.4 GROSS PROFIT 202.2 204.7 Selling, general and administrative expenses 154.0 137.8 Amortization of intangible assets 6.4 3.7 Restructuring charges 4.7 0.4 OPERATING INCOME 37.1 62.8 Interest expense 19.4 14.1 Other expense (income), net 0.4 ( 0.3 ) INCOME BEFORE TAXES 17.3 49.0 Income tax expense 4.0 11.5 NET INCOME $ 13.3 $ 37.5 Average Number of Shares of Common Stock Outstanding Basic 127.5 127.0 Diluted 130.7 130.5 Earnings Per Common Share Basic $ 0.10 $ 0.30 Diluted $ 0.10 $ 0.29 See notes to unaudited condensed consolidated financial statements 1 Table of Contents MasterBrand, Inc. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) 13 Weeks Ended (U.S. Dollars presented in millions) March 30, 2025 March 31, 2024 NET INCOME $ 13.3 $ 37.5 Other comprehensive income, before tax: Foreign currency translation adjustments 1.2 ( 1.1 ) Unrealized gains on derivatives: Unrealized holding gains arising during period 1.0 1.8 Less: reclassification adjustment for losses (gains) included in net income 2.9 ( 0.5 ) Unrealized gains on derivatives 3.9 1.3 Defined benefit plans: Pension settlement gain 5.6 — Amortization of net actuarial loss 0.2 — Defined benefit plans 5.8 — Other comprehensive income, before tax 10.9 0.2 Income tax expense related to items of other comprehensive income ( 1.4 ) — Other comprehensive income, net of tax 9.5 0.2 COMPREHENSIVE INCOME $ 22.8 $ 37.7 See notes to unaudited condensed consolidated financial statements 2 Table of Contents MasterBrand, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (U.S. Dollars presented in millions) March 30, 2025 December 29, 2024 ASSETS Current assets Cash and cash equivalents $ 113.5 $ 120.6 Accounts receivable, net 221.1 191.0 Inventories 288.7 276.4 Other current assets 65.8 62.7 TOTAL CURRENT ASSETS 689.1 650.7 Property, plant and equipment, net of accumulated depreciation 476.2 481.5 Operating lease right-of-use assets, net of accumulated amortization 63.0 66.4 Goodwill 1,126.1 1,125.8 Other intangible assets, net of accumulated amortization 565.3 571.3 Other assets 36.1 34.1 TOTAL ASSETS $ 2,955.8 $ 2,929.8 LIABILITIES AND EQUITY Current liabilities Accounts payable $ 182.4 $ 180.7 Current operating lease liabilities 19.2 19.5 Other current liabilities 160.9 195.2 TOTAL CURRENT LIABILITIES 362.5 395.4 Long-term debt 1,058.2 1,007.8 Deferred income taxes 157.5 158.7 Pension and other postretirement plan liabilities 3.6 3.2 Operating lease liabilities 52.2 55.0 Other non-current liabilities 15.1 15.0 TOTAL LIABILITIES 1,649.1 1,635.1 Contingencies and Accrued Losses (Note 14) Equity Common stock (par value $ 0.01 per share; authorized 750.0 million shares; 131.7 million issued and 127.2 million outstanding as of March 30, 2025 ; 130.9 million issued and 127.6 million outstanding as of December 29, 2024) 1.3 1.3 Paid-in capital 44.8 39.7 Treasury stock, at cost ( 59.9 ) ( 44.0 ) Accumulated other comprehensive loss ( 23.2 ) ( 32.7 ) Retained earnings 1,343.7 1,330.4 TOTAL EQUITY 1,306.7 1,294.7 TOTAL LIABILITIES AND EQUITY $ 2,955.8 $ 2,929.8 See notes to unaudited condensed consolidated financial statements 3 Table of Contents MasterBrand, Inc. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) 13 Weeks Ended (U.S. Dollars presented in millions) March 30, 2025 March 31, 2024 OPERATING ACTIVITIES Net income $ 13.3 $ 37.5 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation 16.4 12.2 Amortization of intangibles 6.4 3.7 Restructuring charges, net of cash payments 3.1 ( 0.8 ) Amortization of finance fees 0.7 0.5 Stock-based compensation 5.1 4.3 Recognition of pension settlement charge 0.3 — Changes in operating assets and liabilities: Accounts receivable ( 30.0 ) ( 21.7 ) Inventories ( 12.2 ) 1.6 Other current assets 5.9 1.3 Accounts payable ( 0.1 ) 10.2 Accrued expenses and other current liabilities ( 38.0 ) ( 29.6 ) Other items ( 2.3 ) ( 0.5 ) NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES ( 31.4 ) 18.7 INVESTING ACTIVITIES Capital expenditures (a) ( 9.8 ) ( 7.0 ) NET CASH USED IN INVESTING ACTIVITIES ( 9.8 ) ( 7.0 ) FINANCING ACTIVITIES Proceeds from revolving credit facility borrowings 95.0 — Repayment of revolving credit facility borrowings ( 45.0 ) — Repurchase of common stock ( 11.4 ) ( 1.6 ) Payments of employee taxes withheld from share-based awards ( 4.5 ) ( 4.9 ) Other items ( 0.6 ) ( 0.6 ) NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 33.5 ( 7.1 ) Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash 0.2 0.4 NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH $ ( 7.5 ) $ 5.0 Cash, cash equivalents, and restricted cash at beginning of period $ 121.6 $ 148.7 Cash, cash equivalents, and restricted cash at end of period $ 114.1 $ 153.7 Cash and cash equivalents $ 113.5 $ 153.7 Restricted cash included in other assets 0.6 — Total cash, cash equivalents and restricted cash $ 114.1 $ 153.7 (a) Capital expenditures of $ 4.6 million and $ 4.1 million that have not been paid as of March 30, 2025 and March 31, 2024, respectively, were excluded from the condensed consolidated statements of cash flows. See notes to unaudited condensed consolidated financial statements 4 Table of Contents MasterBrand, Inc. CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) Common Stock Paid-in Capital Treasury stock, at cost Accumulated Other Comprehensive Loss Retained Earnings Total Equity (U.S. Dollars and shares presented in millions) Shares Amount 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 — — — — — 37.5 37.5 Other comprehensive income — — — — 0.2 — 0.2 Stock-based compensation 0.5 — 4.3 ( 4.9 ) — — ( 0.6 ) Stock repurchase program ( 0.1 ) — — ( 1.9 ) — — ( 1.9 ) Balance at March 31, 2024 127.2 $ 1.3 $ 22.1 $ ( 32.9 ) $ ( 3.5 ) $ 1,242.0 $ 1,229.0 Balance at December 29, 2024 127.6 $ 1.3 $ 39.7 $ ( 44.0 ) $ ( 32.7 ) $ 1,330.4 $ 1,294.7 Comprehensive income: Net income — — — — — 13.3 13.3 Other comprehensive income — — — — 9.5 — 9.5 Stock-based compensation 0.4 — 5.1 ( 4.5 ) — — 0.6 Stock repurchase program ( 0.8 ) — — ( 11.4 ) — — ( 11.4 ) Balance at March 30, 2025 127.2 $ 1.3 $ 44.8 $ ( 59.9 ) $ ( 23.2 ) $ 1,343.7 $ 1,306.7 See notes to unaudited condensed consolidated financial statements 5 Table of Contents MasterBrand, Inc. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation and Principles of Consolidation Background MasterBrand, Inc. is a leading manufacturer of residential cabinets in North America with a portfolio of leading residential cabinetry products for the kitchen, bathroom and other parts of the home. References to “MasterBrand,” “the Company,” “we,” “our” and “us” refer to MasterBrand, Inc. and its consolidated subsidiaries, unless the context otherwise requires. Basis of Presentation Our consolidated financial statements are based on a 52- or 53-week fiscal year ending on the last Sunday in December in each calendar year. Our fiscal 2025 and 2024 consist of 52 weeks ending on December 28, 2025 and December 29, 2024, respectively. The condensed consolidated balance sheets as of March 30, 2025 , as well as the related condensed consolidated statements of income, comprehensive income, cash flows and equity for the thirteen weeks ended March 30, 2025 and the thirteen weeks ended March 31, 2024 are unaudited. The presentation of these financial statements requires us to make estimates and assumptions that affect reported amounts and related disclosures. Actual results could differ from those estimates. In the opinion of management, all adjustments, consisting of normal, recurring accruals, considered necessary for a fair statement of the financial statements have been included. Interim results may not be indicative of results for a full year. The condensed consolidated financial statements and notes are presented pursuant to the rules and regulations of the Securities and Exchange Commission and do not contain certain information included in our audited consolidated financial statements and notes. The 2024 condensed consolidated balance sheet was derived from our audited consolidated financial statements, but does not include all disclosures required by United States Generally Accepted Accounting Principles (“GAAP”). These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024 . 2. Recently Issued Accounting Standards Accounting Standards Issued and Adopted There are no recently issued accounting pronouncements that we have adopted and which have had a material effect on our results of operations, cash flows or financial condition. Accounting Standards Issued, But Not Yet Adopted Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which is intended to enhance the transparency, decision usefulness and effectiveness of income tax disclosures. The amendments in this ASU require a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories. A public entity is also required to provide a qualitative description of the states and local jurisdictions that make up the majority of the effect of the state and local income tax category and the net amount of income taxes paid, disaggregated by federal, state and foreign taxes and also disaggregated by individual jurisdictions. The amendments also remove certain disclosures that are no longer considered cost beneficial. The amendments are effective prospectively for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. The Company is adopting this guidance when it becomes effective in our Annual Report on Form 10-K for the fiscal year ending December 28, 2025. 6 Table of Contents 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 condensed consolidated financial statements. 3. 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, crafted 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. The Company incurred $ 1.6 million of acquisition-related costs associated with the acquisition in the thirteen weeks ended March 30, 2025 , which are recorded within selling, general and administrative expenses in the condensed consolidated statements of income. The purchase price of Supreme was allocated on a preliminary basis as of the closing date of July 10, 2024. 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 of up to one year from the date of acquisition. Since the initial measurement of the identified assets acquired and liabilities assumed, progress was made in completing certain of our additional valuations and analyses and disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 29, 2024. There were no adjustments to the preliminary valuation of identifiable assets acquired and liabilities assumed during the first quarter of 2025. We continue to evaluate the initial fair values, which may be adjusted with an offsetting impact to goodwill, as additional information relative to the fair values of the assets and liabilities becomes available over the measurement period. Pro forma financial information Net sales and earnings related to the operations of Supreme that have been included in our condensed consolidated statements of income for the thirteen weeks ended March 30, 2025 are as follows: (U.S. Dollars presented in millions) Net Sales $ 60.8 Net Income $ 4.1 4. Revenue from Contracts with Customers Our principal performance obligations are the sale of high quality stock, semi-custom and premium cabinetry, as well as vanities, for the kitchen, bath and other parts of the home (collectively, “goods” or “products”). We recognize revenue for the sale of goods based on our assessment of when control transfers to our customers, which generally occurs upon shipment or delivery of the products. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods to our customers. Payment terms on our product sales normally range from 30 to 90 days. Taxes assessed by a governmental authority that we collect are excluded from revenue. The expected costs associated with our contractual warranties are recognized as expense when the products are sold. See Note 14, "Contingencies and Accrued Losses," for further discussion. 7 Table of Contents We record estimates to reduce revenue for customer programs and incentives, which are considered variable consideration, and include price discounts, volume-based incentives, promotions and cooperative advertising when revenue is recognized in order to determine the amount of consideration the Company will ultimately be entitled to receive. These estimates are based on historical and projected experience for each type of customer. In addition, for certain customer program incentives, we receive an identifiable benefit (goods or services) in exchange for the consideration given and record the associated expenditure in selling, general and administrative expenses. We account for shipping and handling costs that occur after the customer has obtained control of a product as a fulfillment activity (i.e., as an expense) rather than as a promised service (i.e., as a revenue element). These costs are classified within selling, general and administrative expenses. Settlement of our outstanding accounts receivable balances normally occurs within 30 to 90 days of the original sale transaction date. Obligations arise for us from customer rights to return our goods, including among others, product obsolescence, stock rotations, trade-in agreements for newer products and upon termination of a customer contract. We estimate future product returns at the time of sale based on historical experience and record a corresponding refund obligation, which amounted to $ 2.2 million and $ 1.9 million as of March 30, 2025 and December 29, 2024, respectively. Refund obligations are classified within other current liabilities in our condensed consolidated balance sheets. Return assets related to the refund obligation are measured at the carrying amount of the goods at the time of sale, less any expected costs to recover the goods and any expected reduction in value. The Company disaggregates revenue from contracts with customers into (i) major sales distribution channels and (ii) total sales to customers by shipping location, as these categories depict the nature, amount, timing and uncertainty of revenues and cash flows that are affected by economic factors. The following table disaggregates our consolidated revenue by major sales distribution channels and by shipping location for the thirteen weeks ended March 30, 2025 and March 31, 2024 . 13 Weeks Ended (U.S. Dollars presented in millions) March 30, 2025 March 31, 2024 Net Sales by Channel Dealers (a) $ 353.1 $ 315.0 Retailers (b) 223.5 242.9 Builders (c) 83.7 80.2 Net sales $ 660.3 $ 638.1 Net Sales by Shipping Location United States $ 635.0 $ 608.2 Canada 21.9 25.2 Mexico 3.4 4.7 Net sales $ 660.3 $ 638.1 (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. (c) Represents sales directly to builders. Practical Expedients Incremental costs of obtaining a contract include only those costs the Company incurs that would not have been incurred if the contract had not been obtained. These costs are required to be recognized as assets and amortized over the period that the related goods or services transfer to the customer. As a practical expedient, we expense as incurred costs to obtain a contract when the expected amortization period is one year or less. These costs are recorded within selling, general and administrative expenses in the accompanying condensed consolidated statements of income. 8 Table of Contents Allowance for Credit Losses Our primary allowance for credit losses is the allowance for doubtful accounts. The allowance for doubtful accounts reduces the trade accounts receivable balance to the estimated net realizable value that is expected to be collected. The allowance is based on assessments of current creditworthiness of customers, historical collection experience, the aging of receivables and other currently available evidence. Trade accounts receivable balances are written-off against the allowance if a final determination of uncollectibility is made. All provisions for allowances for doubtful collection of accounts are included in selling, general and administrative expenses. The following table summarizes the activity for the thirteen weeks ended March 30, 2025 and March 31, 2024: 13 Weeks Ended (U.S. Dollars presented in millions) March 30, 2025 March 31, 2024 Beginning balance $ 3.0 $ 4.6 Bad debt provision 0.2 — Uncollectible accounts written off, net of recoveries ( 2.1 ) ( 0.9 ) Ending balance $ 1.1 $ 3.7 5 . Earnings Per Share The following table sets forth the reconciliation of the numerator and the denominator of basic earnings per share and diluted earnings per share for the thirteen weeks ended March 30, 2025 and March 31, 2024: 13 Weeks Ended (U.S. Dollars presented in millions, except per share amounts) March 30, 2025 March 31, 2024 Numerator: Numerator for basic and diluted earnings per share - Net income $ 13.3 $ 37.5 Denominator: Denominator for basic earnings per share - weighted average shares outstanding 127.5 127.0 Effect of dilutive securities - stock-based awards 3.2 3.5 Denominator for diluted earnings per share - weighted average shares outstanding $ 130.7 $ 130.5 Earnings per share: Basic $ 0.10 $ 0.30 Diluted $ 0.10 $ 0.29 Approximately 1.0 million shares were excluded from the calculation of diluted earnings per share for the thirteen weeks ended March 31, 2024, because their inclusion would have been anti-dilutive. 9 Table of Contents 6. Balance Sheet Information Supplemental information on our condensed consolidated balance sheets is as follows: (U.S. Dollars presented in millions) March 30, 2025 December 29, 2024 Inventories: Raw materials and supplies $ 197.3 $ 197.2 Work in process 25.6 25.7 Finished products 65.8 53.5 Total inventories $ 288.7 $ 276.4 Property, plant and equipment: Land and improvements $ 37.5 $ 37.4 Buildings and improvements to leaseholds 363.1 360.1 Machinery and equipment 654.6 648.8 Construction in progress 40.8 41.4 Property, plant and equipment, gross 1,096.0 1,087.7 Less: accumulated depreciation 619.8 606.2 Property, plant and equipment, net of accumulated depreciation $ 476.2 $ 481.5 Other current liabilities: Accrued salaries, wages and other compensation $ 41.0 $ 54.9 Accrued income and other taxes 16.7 14.2 Interest payable 10.8 25.5 Accrued product warranties 8.8 9.3 Accrued restructuring 7.7 4.9 Derivative payable 2.1 5.7 Other accrued expenses 73.8 80.7 Total other current liabilities $ 160.9 $ 195.2 10 Table of Contents 7. Goodwill and Identifiable Intangible Assets We had goodwill of $ 1,126.1 million and $ 1,125.8 million as of March 30, 2025 and December 29, 2024, respectively. The change in the net carrying amount of goodwill was as follows: (U.S. Dollars presented in millions) Total Goodwill Balance at December 29, 2024 $ 1,125.8 2025 translation adjustments 0.3 Balance at March 30, 2025 $ 1,126.1 The gross carrying value and accumulated amortization by class of intangible assets as of March 30, 2025 and December 29, 2024 were as follows: March 30, 2025 December 29, 2024 (U.S. Dollars presented in millions) Gross Carrying Amounts Accumulated Amortization Net Book Value Gross Carrying Amounts Accumulated Amortization Net Book Value Indefinite-lived tradenames $ 266.4 $ — $ 266.4 $ 266.1 $ — $ 266.1 Amortizable intangible assets Tradenames 10.0 ( 10.0 ) — 10.0 ( 10.0 ) — Customer and contractual relationships 535.7 ( 236.8 ) 298.9 535.4 ( 230.2 ) 305.2 Patents/proprietary technology 11.0 ( 11.0 ) — 11.0 ( 11.0 ) — Total 556.7 ( 257.8 ) 298.9 556.4 ( 251.2 ) 305.2 Total identifiable intangibles $ 823.1 $ ( 257.8 ) $ 565.3 $ 822.5 $ ( 251.2 ) $ 571.3 There were no impairments of goodwill or indefinite-lived assets for the thirteen weeks ended March 30, 2025 . The Company tests goodwill and indefinite-lived intangibles for impairment annually in the fourth quarter or more frequently if events or changes in circumstances indicate the asset might be impaired. There were no triggering events requiring an impairment assessment be conducted in the thirteen weeks ended March 30, 2025. However, it is possible that future changes in circumstances would require the Company to record non-cash impairment charges. 11 Table of Contents 8. Financial Instruments We do not enter into financial instruments for trading or speculative purposes. We principally use financial instruments to reduce the impact of changes in foreign currency exchange rates. The principal derivative financial instruments we enter into on a routine basis are foreign exchange contracts. Derivative financial instruments are recorded at fair value. The counterparties to derivative contracts are major financial institutions. We are subject to credit risk on these contracts equal to the fair value of these instruments. Management currently believes that the risk of incurring material losses is unlikely and that the losses, if any, would be immaterial to the Company. We account for derivative instruments as follows: • Derivative instruments that are designated as cash flow hedges - The changes in the fair value of the derivative instrument are reported in other comprehensive income and are recognized in the condensed consolidated statements of income when the hedged item affects earnings. In all periods presented, the recognized gain or loss on the derivative instrument, as well as the offsetting gain or loss on the hedged item, are recognized in cost of products sold on the condensed consolidated statements of income. • Derivative instruments that are designated as fair value hedges - The gain or loss on the derivative instrument, as well as the offsetting gain or loss on the hedged item, are recognized in other expense, net on the condensed consolidated statements of income. • Derivative instruments that are designated as net investment hedges - The changes in fair value of the derivative instrument are recognized in the condensed consolidated statements of income when realized upon sale or upon complete or substantially complete liquidation of the investment in the foreign entity. As of and for the thirteen weeks ended March 30, 2025 and March 31, 2024, we have only entered into foreign currency forward contracts, some of which have been designated as fair value hedges and some of which have been designated as cash flow hedges. We may enter into foreign currency forward contracts to protect against foreign exchange risks associated with certain existing assets and liabilities, forecasted future cash flows and net investments in foreign subsidiaries. Foreign exchange contracts related to forecasted future cash flows correspond to the periods of the forecasted transactions, which generally do not exceed 12 to 15 months subsequent to the latest balance sheet date. Our primary foreign currency hedge contracts pertain to the Mexican peso and the Canadian dollar. The gross U.S. dollar equivalent notional amount of all foreign currency derivative hedges outstanding at March 30, 2025, was $ 79.3 million, representing a net settlement liability of $ 1.9 million. Based on foreign exchange rates as of March 30, 2025 , we estimate that the $ 1.1 million of net derivative losses associated with cash flow hedges and included in accumulated other comprehensive inco me as of March 30, 2025, will be reclassified to earnings within the next twelve months. The fair values of foreign exchange derivative instruments on the condensed consolidated balance sheets as of March 30, 2025 and December 29, 2024 were: (U.S. Dollars presented in millions) Location March 30, 2025 December 29, 2024 Assets: Foreign exchange contracts Other current assets $ 0.2 $ — Total assets $ 0.2 $ — Liabilities: Foreign exchange contracts Other current liabilities $ 2.1 $ 5.7 Total liabilities $ 2.1 $ 5.7 The effects of cash flow hedging financial instruments included within the condensed consolidated statements of comprehensive income for the thirteen weeks ended March 30, 2025 and March 31, 2024 are presented in the table below. When the hedged item affects earnings, amounts are reclassed out of accumulated other comprehensive loss and recognized as a component of cost of products sold. 12 Table of Contents Amount Recognized in Statement of Comprehensive Income for Cash Flow Hedging Relationships 13 Weeks Ended (U.S. Dollars presented in millions) March 30, 2025 March 31, 2024 Foreign exchange contracts: Unrealized holding gains arising during period $ 1.0 $ 1.8 Less: reclassification adjustment for losses (gains) included in net income 2.9 ( 0.5 ) Unrealized gains on derivatives $ 3.9 $ 1.3 The effects of fair value hedging financial instruments included in other expense, net on the condensed consolidated statements of income for the thirteen weeks ended March 30, 2025 and March 31, 2024 were: Amount of (Loss) Gain Recognized in Earnings on Fair Value Hedging Relationships 13 Weeks Ended (U.S. Dollars presented in millions) March 30, 2025 March 31, 2024 Foreign exchange contracts: Hedged items $ ( 0.2 ) $ 0.1 Net (losses) gains recognized in earnings $ ( 0.2 ) $ 0.1 9. Fair Value Measurements ASC 820, Fair Value Measurements and Disclosures, establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels. Level 1 inputs, the highest priority, are quoted prices in active markets for identical assets or liabilities. Level 2 inputs reflect other than quoted prices included in Level 1 that are either observable directly or through corroboration with observable market data. Level 3 inputs are unobservable inputs due to little or no market activity for the asset or liability, such as internally-developed valuation models. We do not have any assets or liabilities measured at fair value on a recurring basis that are Level 3, except for certain assumptions in estimating the fair value of indefinite-lived tradenames, as discussed in Note 3, "Acquisition of Supreme," and Note 9, "Goodwill and Identifiable Intangible Assets," in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024. Assets and liabilities measured at fair value on a recurring basis as of March 30, 2025 and December 29, 2024 were as follows: Fair Value (U.S. Dollars presented in millions) March 30, 2025 December 29, 2024 Assets: Derivative asset financial instruments (Level 2) $ 0.2 $ — Deferred compensation program assets (Level 2) 10.7 9.6 Total assets $ 10.9 $ 9.6 Liabilities: Derivative liability financial instruments (Level 2) $ 2.1 $ 5.7 The principal derivative financial instruments we enter into on a routine basis are foreign exchange contracts. Derivative financial instruments are recorded at fair value. The 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 March 30, 2025, both the fair value and carrying value of total debt was $ 1,070.0 million , excluding deferred financing costs. 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. 13 Table of Contents 10. Debt The following table provides a summary of the Company’s debt as of March 30, 2025 and December 29, 2024, including the carrying value of the debt less debt issuance costs: March 30, 2025 December 29, 2024 (U.S. Dollars presented in millions) Long-term Long-term Revolving credit facility due June 2029 $ 370.0 $ 320.0 7.00 % Senior Notes due 2032 700.0 700.0 1,070.0 1,020.0 Less: Unamortized debt issuance costs ( 11.8 ) ( 12.2 ) Total $ 1,058.2 $ 1,007.8 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 March 30, 2025. As of March 30, 2025, prepaid debt issuance costs related to the Notes were $ 11.8 million and are being amortized over the term of the debt. These costs are included in long-term debt in our condensed consolidated balance sheets. The Company was in compliance with all of its debt covenants under the Indenture as of March 30, 2025 and 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. 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 a financial covenant that does not permit the Company to allow its net leverage ratio to exceed, in the case of any fiscal quarter ending on or following March 30, 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 March 30, 2025 and December 29, 2024. 14 Table of Contents The revolving credit facility had an outstanding balance of $ 370.0 million as of March 30, 2025 and had $ 358.6 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 March 30, 2025, prepaid debt issuance costs related to the 2024 Credit Agreement were $ 4.4 million and will be amortized over the term of the debt. At March 30, 2025, these costs are included in other assets in our condensed consolidated balance sheets. Interest paid on debt was $ 33.4 million and $ 14.1 million for the thirteen weeks ended March 30, 2025 and March 31, 2024 , respectively. 11. Restructuring Charges For the thirteen weeks ended March 30, 2025 , we recognized restructuring charges of $ 4.7 million. For the thirteen weeks ended March 31, 2024, we recognized restructuring charges of $ 0.4 million. Restructuring charges for all periods presented 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. Reconciliation of Restructuring Liability (U.S. Dollars presented in millions) Balance at December 29, 2024 Provision Cash Expenditures (a) Non-cash Writeoffs Balance at March 30, 2025 Workforce reduction costs $ 4.8 $ 3.9 $ ( 1.0 ) $ — $ 7.7 Other 0.1 0.8 ( 0.6 ) ( 0.3 ) — $ 4.9 $ 4.7 $ ( 1.6 ) $ ( 0.3 ) $ 7.7 (U.S. Dollars presented in millions) Balance at December 31, 2023 Provision Cash Expenditures (a) Non-cash Writeoffs Balance at March 31, 2024 Workforce reduction costs $ 1.3 $ 0.1 $ ( 0.9 ) $ — $ 0.5 Other 0.1 0.3 ( 0.3 ) — 0.1 $ 1.4 $ 0.4 $ ( 1.2 ) $ — $ 0.6 (a) Cash expenditures primarily related to severance charges. 12. Income Taxes The effective income tax rates for the thirteen weeks ended March 30, 2025 and March 31, 2024, were 23.1 percent and 23.5 percent, respectively. The decrease in effective tax rate between the periods is primarily the result of lower foreign income taxed at higher rates, return-to-provision adjustments, and foreign inclusions net of foreign tax credits, partially offset by an increase in the valuation allowance and a reduction in the stock compensation windfall benefits for shares which vested. The difference between our effective income tax rate for the thirteen weeks ended March 30, 2025, and the U.S. statutory rate of 21.0 percent is primarily due to the unfavorable impact of net changes in state and local income taxes, nondeductible compensation, foreign income taxed at higher rates, an increase in the valuation allowance and foreign income inclusions net of foreign tax credits. These were partially offset by benefits for return-to-provision adjustments , the stock compensation windfall benefit for shares which vested, tax credits, and foreign exclusions. The difference between the Company’s effective income tax rate for the thirteen weeks ended March 31, 2024, and the U.S. statutory rate of 21.0 percent is primarily due to the unfavorable impact of state and local income taxes, foreign income inclusions net of foreign tax credits and nondeductible compensation, partially offset by the stock compensation windfall benefit for shares which vested and the mix of earnings in jurisdictions with differing tax rates. 15 Table of Contents 13. Pension and Other Postretirement Plans We have a defined benefit pension plan in the United States covering many of the Company’s associates. In addition, the Company provides postretirement health care and life insurance benefits to certain retirees. The defined benefit pension plan has been frozen to new participants and benefit accruals were frozen for active participants on or before December 31, 2016. During 2023, the Board of Directors of MasterBrand, Inc. approved a plan to terminate the defined benefit pension plan. The termination and settlement process preserves retirement benefits due to participants but changes the ultimate payor of such benefits. 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. On February 18, 2025, the Company completed the purchase of group annuity contracts with an insurance company, in which the liability, plan administration and payout of benefits were irrevocably transferred. In June 2025, the insurance company will begin paying plan benefits to eligible plan participants through the group annuity contracts. As a result of the settlement, the Company recognized a non-cash settlement charge of $ 0.3 million recorded within other expense (income), net in the accompanying condensed consolidated statements of income for the quarter ended March 30, 2025. As a result of the termination of the defined benefit pension plan, the Company recognized a surplus in plan assets of $ 5.2 million, recorded within other current assets in the accompanying condensed consolidated balance sheet as of March 30, 2025. The Company intends to use the surplus to satisfy other Company obligations for qualified replacement plans. The components of net periodic cost (benefit) for pension and other postretirement plans for the thirteen weeks ended March 30, 2025 and March 31, 2024, respectively, are as set forth in the table below. Service cost is classified as either a component of cost of products sold or within selling, general and administrative expenses in the condensed consolidated statements of income, based on the nature of the job responsibilities of the associates participating in the plans. All other components of net periodic cost are classified as other expense (income), net in the condensed consolidated statements of income. Pension Benefits Postretirement Benefits 13 Weeks Ended 13 Weeks Ended (U.S. Dollars presented in millions) March 30, 2025 March 31, 2024 March 30, 2025 March 31, 2024 Service cost $ — $ — $ 0.1 $ 0.1 Interest cost 0.4 1.3 0.1 0.1 Expected return on plan assets ( 0.4 ) ( 1.0 ) — — Settlement charge 0.3 — — — Net periodic cost $ 0.3 $ 0.3 $ 0.2 $ 0.2 16 Table of Contents 14. Contingencies and Accrued Losses Product Warranties We generally record warranty expense related to contractual warranty terms at the time of sale. We may also provide customer concessions for claims made outside of the contractual warranty terms and those expenses are recorded in the period in which the concession is made. We offer our customers various warranty terms based on the type of product that is sold. Warranty expense is determined based on historic claim experience and the nature of the product category. The following table summarizes activity related to our product warranty liability for the thirteen weeks ended March 30, 2025 and March 31, 2024. 13 Weeks Ended (U.S. Dollars presented in millions) March 30, 2025 March 31, 2024 Reserve balance at the beginning of the period $ 9.3 $ 12.9 Provision for warranties issued 5.9 5.4 Settlements made (in cash or in kind) ( 6.4 ) ( 6.7 ) Reserve balance at the end of the period $ 8.8 $ 11.6 Litigation The Company is a defendant in lawsuits that are ordinary routine litigation matters incidental to our business and operations. In addition, other matters, including tax assessments, audits, claims and governmental investigations and proceedings covering a wide range of matters are pending against us. It is not possible to predict the outcome of the pending actions, and, as with any such matters, it is possible that these actions could be decided unfavorably to the Company. The Company believes that there are meritorious defenses to these actions and that these actions will not have a material adverse effect upon the Company’s results of operations, cash flows or financial condition, and where appropriate, these actions are being vigorously contested. Accordingly, the Company believes the likelihood of material loss is remote. However, such matters are subject to inherent uncertainties and unfavorable rulings or other events could occur. The Company regularly undergoes tax audits in various jurisdictions in which our products are sold or manufactured. In the future, costs related to such audits or an unfavorable outcome could have a material impact on our condensed consolidated results of operations, cash flows and financial condition. Following an audit for the 2018 tax year, the Mexican tax administration service, the Servicio de Administración Tributaria, (the “SAT”), issued a tax assessment in the amount of approximately $ 54.9 million to our subsidiary, Woodcrafters Home Products, S. de R.L. de C.V., for allegedly failing to make certain tax payments and to export timely certain merchandise. The Company disputed these findings, and the SAT annulled their decision on January 11, 2024. In order to prevent the 2018 tax year from further audit by the SAT, the Company has filed an action to declare this annulment final in the specialized court of trade and customs in Monterrey, Nuevo Leon, Sala Especializada en Materia de Comercio Exterior y Auxiliar – Noreste, Tribunal Federal de Justicia Administrativa. We reserved an immaterial amount related to the 2018 tax year audit as our best estimate of our probable liability as of March 30, 2025 and December 29, 2024. While we cannot predict with certainty the outcome of any future review relating to the 2018 tax year or other open tax years, based on currently known information, we believe our risk of additional loss is remote and not estimable. Environmental We reserve for remediation activities to clean up potential environmental liabilities as required by federal and state laws based on our best estimate of undiscounted future costs, excluding possible insurance recoveries or recoveries from other third parties. There were no material environmental accruals as of March 30, 2025 and December 29, 2024. 17 Table of Contents 15. Accumulated Other Comprehensive Loss Total accumulated other comprehensive loss consists of net income and other changes in business equity from transactions and other events from sources other than stockholders. It includes currency translation gains and losses, realized gains and losses from derivative instruments designated as cash flow hedges, and defined benefit plan adjustments. The after-tax components of and changes in accumulated other comprehensive loss for the thirteen weeks ended March 30, 2025 and March 31, 2024 were as follows: (U.S. Dollars presented in millions) Foreign Currency Adjustments Derivative Hedging (Loss) Gain Pension and Other Postretirement Plans Adjustments Accumulated Other Comprehensive Loss Balance at December 29, 2024 $ ( 23.6 ) $ ( 5.0 ) $ ( 4.1 ) $ ( 32.7 ) Amounts classified into accumulated other comprehensive (loss) income 1.2 1.0 4.2 6.4 Amounts reclassified into earnings — 2.9 0.2 3.1 Net current period other comprehensive income 1.2 3.9 4.4 9.5 Balance at March 30, 2025 $ ( 22.4 ) $ ( 1.1 ) $ 0.3 $ ( 23.2 ) Balance at December 31, 2023 $ 4.1 $ 2.2 $ ( 10.0 ) $ ( 3.7 ) Amounts classified into accumulated other comprehensive (loss) income ( 1.1 ) 1.8 — 0.7 Amounts reclassified into earnings — ( 0.5 ) — ( 0.5 ) Net current period other comprehensive (loss) income ( 1.1 ) 1.3 — 0.2 Balance at March 31, 2024 $ 3.0 $ 3.5 $ ( 10.0 ) $ ( 3.5 ) 16. Stock Repurchase Programs On May 9, 2023, we announced our Board of Directors’ authorization of a stock repurchase program (“2023 Share Repurchase Authorization”) under which we may repurchase up to $ 50.0 million of our common stock over a twenty-four month period expiring on April 23, 2025. On March 13, 2025, our Board of Directors’ authorized an additional stock repurchase program (“2025 Share Repurchase Authorization”) under which we may repurchase up to $ 50.0 million of our common stock over a thirty-six month period expiring on March 13, 2028. This stock repurchase program is in addition to the 2023 Share Repurchase Authorization. Both stock repurchase programs allow the Company to repurchase shares at management’s discretion for general corporate purposes. As a result of the authorization of both plans, we may repurchase shares from time to time through open market purchases, privately-negotiated transactions, block trades or otherwise in accordance with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Securities Exchange Act of 1934, as amended. The timing and amount of our purchases will depend upon prevailing market conditions, our available capital resources, our financial and operational performance, alternative uses of capital and other factors. We may limit or terminate either repurchase program at any time. During the thirteen weeks ended March 30, 2025, we repurchased 838,984 shares of our common stock under the 2023 Share Repurchase Authorization. The shares were repurchased at a cost of approximately $ 11.4 million, or an average of $ 13.60 per share. During the thirteen weeks ended March 31, 2024, we repurchased 104,000 shares of our common stock under the 2023 Share Repurchase Authorization. The shares were repurchased at a cost of approximately $ 1.9 million, or an average of $ 18.29 per share. As of March 30, 2025, $ 10.0 million remained authorized for the purchase of shares under the 2023 Share Repurchase Authorization, and $ 50.0 million remained authorized for the purchase of shares under the 2025 Share Repurchase Authorizaton. 18 Table of Contents 17 . 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. The Company 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. 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 that 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: 13 Weeks Ended (U.S. Dollars presented in millions) March 30, 2025 March 31, 2024 Net sales $ 660.3 $ 638.1 Less: Raw materials 232.7 222.1 Production labor and overhead 225.4 211.3 Non-production associate-related costs 55.1 49.3 Distribution costs 36.7 37.5 Commissions 12.8 10.5 Amortization of intangibles 6.4 3.7 Other segment items (a) 54.1 40.9 Interest expense 19.4 14.1 Other expense (income), net 0.4 ( 0.3 ) Income tax expense 4.0 11.5 Consolidated net income $ 13.3 $ 37.5 (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. 19 Table of Contents