What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-05 compared with 2025-08-06 · 129 added, 112 removed, 140 unchanged (63% of the section changed)

25 unchanged sentences

• The effects of a public health crisis or other unexpected event;

• Changes in the anticipated timing for closing the combination of MasterBrand with American Woodmark (the “Transaction”);

• Changes in the anticipated timing for closing the combination of MasterBrand with American Woodmark (the “Transaction”), including the impact of the U.S.

government shutdown;

• Delays in obtaining, adverse conditions contained in, or the inability to obtain necessary regulatory approvals or complete regulatory reviews required to complete the Transaction;

1 unchanged sentence

• The inability to complete the Transaction;

• The inability to recognize, or delays in obtaining, anticipated benefits of the Transaction and acquisition of American Woodmark, including synergies, which may be affected by, among other things, competition, the ability of the combined company to integrate operations in a successful manner and in the expected time period, grow and manage growth profitably, maintain relationships with customers and suppliers and retain key employees;

• The inability to recognize, or delays in obtaining, anticipated benefits of the Transaction, including synergies, which may be affected by, among other things, competition, the ability of the combined company to integrate operations in a successful manner and in the expected time period, grow and manage growth profitably, maintain relationships with customers and suppliers and retain key employees;

• The impact of our current and any additional future debt obligations on our business, current and future operations, profitability and our ability to meet other obligations;

• Business disruption following the acquisition of American Woodmark and during the pendency of or following the Transaction;

• Business disruption during the pendency of or following the Transaction;

• Diversion of management time on Transaction-related issues;

• The reaction of customers and other persons to the acquisition of American Woodmark and the Transaction;

• The reaction of customers and other persons to the Transaction;

• Other statements contained in this Quarterly Report on Form 10-Q regarding items that are not historical facts or that involve predictions.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is a supplement to the accompanying condensed consolidated financial statements of MasterBrand and its consolidated subsidiaries and provides additional information on our business, recent developments, financial condition, liquidity and capital resources, cash flows and results of operations.

Founded over 70 years ago, we are the largest manufacturer of residential cabinets in North America.

Founded over 70 years ago, we are a leading manufacturer of residential cabinets in North America.

Our superior product quality, innovative design and service excellence drives a compelling value proposition.

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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.

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.

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Merger Sub, a direct wholly owned subsidiary of the Company, will merge with and into American Woodmark, with American Woodmark surviving the merger and continuing as a wholly owned subsidiary of the Company.

The closing of the Merger, which is expected to occur in early 2026, is subject to approval by stockholders of the Company and American Woodmark, respectively, as well as other customary closing conditions.

The closing of the Merger, which is expected to occur in early 2026, is subject to the receipt of clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the satisfaction or waiver of other customary closing conditions.

Both companies received the necessary shareholder approval at their respective special meetings of shareholders held on October 30, 2025.

Recent Developments

The Company continues to actively monitor recent trade policy and tariff announcements, including t he recently announced Section 232 lumber tariffs, effective October 14, 2025.

Increased restrictions on global trade, including an increase in U.S.

tariffs and any retaliatory responses thereto, have resulted in and could further result in, among other things, increased input costs, supply chain disruptions, decreased consumer demand and volatility in foreign exchange rates and financial markets.

to analyze the impact of these actions and adjust our mitigation strategy, including pricing, productivity and repositioning our supply chain to offset the impact of the tariff exposure as trade policy evolves.

The uncertain and evolving market dynamics and global trade environment could have a material adverse effect on the Company’s business, financial condition, and results of operations.

On July 4, 2025, the “One Big Beautiful Bill Act” (“OBBBA”) was enacted into U.S.

The OBBBA includes changes to several corporate tax provisions, including tax deductions for qualified research expenditures, changes to business interest expense limitations and bonus depreciation.

The OBBBA legislation does not materially impact our 2025 annual effective tax rate but is expected to reduce 2025 cash taxes.

In 2024, certain jurisdictions in which we operate enacted, or announced their intention to enact, legislation consistent with one or

more Organization for Economic Co-operation and Development Global Anti-Base Erosion Model Rules (“Pillar Two”).

The model rules include qualified domestic minimum top-up taxes, income inclusion rules, and undertaxed profit rules all aimed to ensure that multinationals pay a minimum effective corporate tax rate of 15 percent in each jurisdiction in which they operate, with some rules effective in 2024, 2025 or 2026.

The Pillar Two legislation, as enacted in certain jurisdictions in which we operate, does not materially impact our 2025 annual effective tax rate but is expected to unfavorably impact our annual effective tax rate in 2026.

Additionally, material changes to our separate legal entity pre-tax book income and structure, the valuation allowance, nondeductible acquisition-related transaction costs, enacted local legislation, or changes in jurisdictions in which we operate could also impact our effective tax rate in the fourth quarter of 2025 or fiscal 2026.

Basis of Presentation

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Furthermore, unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to:

(1) “the second quarter of 2025” refers to the thirteen week period that ended on June 29, 2025;

(2) “the second quarter of 2024” refers to the thirteen week period that ended on June 30, 2024;

(3) “the first half of 2025” refers to the twenty-six weeks ended June 29, 2025 ;

and (4) “ the first half of 2024 ” refers to the twenty-six weeks ended June 30, 2024 .

(1) “the third quarter of 2025” refers to the thirteen week period that ended on September 28, 2025;

(2) “the third quarter of 2024” refers to the thirteen week period that ended on September 29, 2024;

(3) “the first three quarters of 2025” refers to the thirty-nine weeks ended September 28, 2025 ;

and (4) “ the first three quarters of 2024 ” refers to the thirty-nine weeks ended September 29, 2024 .

Results of Operations

The following discussion of condensed consolidated results of operations refers to the thirteen weeks ended June 29, 2025 compared to the thirteen weeks ended June 30, 2024.

Thirteen Weeks Ended June 29, 2025 Compared to the Thirteen Weeks Ended June 30, 2024

The following discussion of condensed consolidated results of operations refers to the thirteen weeks ended September 28, 2025 compared to the thirteen weeks ended September 29, 2024.

Thirteen Weeks Ended September 28, 2025 Compared to the Thirteen Weeks Ended September 29, 2024

Thirteen Weeks Ended

Dollars presented in millions) June 29,

2025 $ change % change June 30,

Dollars presented in millions) September 28,

2025 $ change % change September 29,

NET SALES $ 698.9 $ (19.2) (2.7) % $ 718.1

6 unchanged sentences

Interest expense 18.2 (1.8) (9.0) % 20.0

Other income, net (0.6) 2.3 (79.3) % (2.9)

Other expense (income), net 0.1 1.9 n/m (1)

INCOME BEFORE TAXES 23.4 (16.0) (40.6) % 39.4

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(1) Not meaningful.

Net sales were $730.9 million for the thirteen weeks ended June 29, 2025 compared to $676.5 million for the thirteen weeks ended June 30, 2024, an increase of $54.4 million, or 8.0 percent.

The second quarter of 2025 includes $70.7 million of incremental sales related to the Supreme acquisition.

Excluding the impact of Supreme, the $16.3 million decrease in net sales from the thirteen weeks ended June 30, 2024 was driven primarily by lower sales unit volume of $35.0 million, partially offset by the favorable combined net impact of price and mix on our overall average selling price of $18.9 million.

Overall end market demand was weaker in the second quarter of 2025 compared to the second quarter of 2024 in the repair and remodel and single-family new construction markets.

Foreign currency impact was unfavorable by $0.2 million during the thirteen weeks ended June 29, 2025 as compared to the thirteen weeks ended June 30, 2024.

Compared to the thirteen weeks ended June 30, 2024, net sales to dealers, whose end customers include builders, professional trades and home remodelers, increased $57.3 million, or 16.2 percent, and net sales to retailers, including through their respective retail internet website portals, declined $8.7 million, or 3.8 percent.

Net sales were $698.9 million for the thirteen weeks ended September 28, 2025 compared to $718.1 million for the thirteen weeks ended September 29, 2024, a decline of $19.2 million, or 2.7 percent.

The lower net sales from the thirteen weeks ended September 29, 2024 was driven primarily by lower sales unit volume of $38.3 million, partially offset by the favorable combined net impact of price and mix on our overall average selling price of $19.3 million.

Overall end market demand was weaker in the third quarter of 2025 compared to the third quarter of 2024 in the repair and remodel and single-family new construction markets.

Foreign currency impact was unfavorable by $0.2 million during the thirteen weeks ended September 28, 2025 as compared to the thirteen weeks ended September 29, 2024.

Compared to the thirteen weeks ended September 29, 2024, net sales to dealers, whose end customers include builders, professional trades and home remodelers, declined $1.6 million, or 0.4 percent, and net sales to retailers, including through their respective retail internet website portals, declined $19.2 million, or 8.3 percent.

Net sales directly to builders increased $1.6 million, or 1.7 percent.

Cost of products sold

Cost of products sold increased by $45.7 million, or 10.3 percent, to $491.2 million (67.2 percent of net sales) in the thirteen weeks ended June 29, 2025 as compared to $445.5 million (65.9 percent of net sales) in the thirteen weeks ended June 30, 2024.

The inclusion of Supreme in the thirteen weeks ended June 29, 2025 resulted in an incremental $47.0 million of cost of products sold.

Excluding the impact of Supreme, the $1.3 million decrease in cost of products sold was driven primarily by lower sales unit volume of $21.9 million, partially offset by the combined net impact of costs and mix of $20.6 million.

In the second quarter of 2025, realized savings from various cost reduction actions were more than offset by higher manufacturing costs, including unfavorable fixed cost leverage.

Cost of products sold increased by $0.6 million, or 0.1 percent, to $480.7 million (68.8 percent of net sales) in the thirteen weeks ended September 28, 2025 as compared to $480.1 million (66.9 percent of net sales) in the thirteen weeks ended September 29, 2024.

The $0.6 million increase in cost of products sold was driven primarily by the combined net impact of costs and mix of $26.4 million, partially offset by lower sales unit volume of $25.8 million.

In the third quarter of 2025, realized savings from various cost reduction actions were more than offset by higher manufacturing costs, including unfavorable fixed cost leverage and gross tariffs.

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $12.7 million, or 8.7 percent, to $159.4 million (21.8 percent of net sales) in the thirteen weeks ended June 29, 2025 compared to $146.7 million (21.7 percent of net sales) in the thirteen weeks ended June 30, 2024.

The increase in the thirteen weeks ended June 29, 2025 is primarily due to the inclusion of Supreme ($13.2 million), partially offset by lower acquisition-related costs ($2.5 million).

Selling, general and administrative expenses increased by $1.2 million, or 0.7 percent, to $167.5 million (24.0 percent of net sales) in the thirteen weeks ended September 28, 2025 compared to $166.3 million (23.2 percent of net sales) in the thirteen weeks ended September 29, 2024.

The increase in the thirteen weeks ended September 28, 2025 is primarily due to continued investments in our strategic initiatives ($2.6 million), specifically digital and technology investments and marketing.

increases are partially offset by lower distribution and commission costs ($2.5 million), as a result of the decrease in sales unit volume.

Restructuring charges

Restructuring charges were $6.6 million in the thirteen weeks ended June 29, 2025, compared to restructuring charges of $2.8 million in the thirteen weeks ended June 30, 2024.

Restructuring charges were $2.6 million in the thirteen weeks ended September 28, 2025, compared to restructuring charges of $7.8 million in the thirteen weeks ended September 29, 2024.

Charges in both periods are largely related to severance costs and other employee-related costs in order to better align our workforce with our forecasted demand within our manufacturing footprint.

Interest expense

Interest expense was $18.9 million in the thirteen weeks ended June 29, 2025, which was comparable to interest expense of $20.6 million in the thirteen weeks ended June 30, 2024.

The second quarter of 2025 includes higher interest expense due to the higher outstanding debt balance as a result of the debt refinancing transaction in the second quarter of 2024 associated with the acquisition of Supreme.

The second quarter of 2024 includes $6.5 million of nonrecurring interest expense in connection with the debt refinancing transaction, including the write-off of deferred financing fees.

Other income, net

Other income, net was $0.6 million in the thirteen weeks ended June 29, 2025, a decline of $2.3 million as compared to other income, net of $2.9 million in the thirteen weeks ended June 30, 2024.

This decrease was due primarily to lower transactional foreign currency gains in the second quarter of 2025 as compared to the second quarter of 2024, due to fluctuations in exchange rates.

Our condensed consolidated income before taxes, income tax expense, and effective tax rate for the thirteen weeks ended June 29, 2025 and June 30, 2024 were as follows:

Interest expense was $18.2 million in the thirteen weeks ended September 28, 2025, which was comparable to interest expense of $20.0 million in the thirteen weeks ended September 29, 2024.

The third quarter of 2025 includes lower interest expense due to the lower outstanding debt balance compared to the third quarter of 2024.

Other expense (income), net

Other expense, net was $0.1 million in the thirteen weeks ended September 28, 2025, a decline of $1.9 million as compared to other income, net of $1.8 million in the thirteen weeks ended September 29, 2024.

This decrease was due primarily to lower transactional foreign currency gains in the third quarter of 2025 as compared to the third quarter of 2024, due to fluctuations in exchange rates.

Our condensed consolidated income before taxes, income tax expense, and effective tax rate for the thirteen weeks ended September 28, 2025 and September 29, 2024 were as follows:

Thirteen Weeks Ended

Dollars presented in millions, except percentages) June 29,

2025 June 30,

Dollars presented in millions, except percentages) September 28,

2025 September 29,

Income before taxes $ 23.4 $ 39.4

1 unchanged sentence

Effective tax rate 22.6 % 26.1 %

The effective income tax rates for the thirteen weeks ended June 29, 2025 and June 30, 2024, were 23.9 percent and 24.6 percent , respectively.

The net decrease in the effective tax rate between the periods is primarily due to lower state and local income taxes and changes in foreign exclusions, partially offset by an increase in the valuation allowance and a reduction in the stock compensation windfall benefit for shares which vested.

The difference between our effective income tax rate for the thirteen weeks ended June 29, 2025 , and the U.S.

statutory rate of 21.0 percent is 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 the release of uncertain tax positions and foreign exclusions .

The difference between our effective income tax rate for the thirteen weeks ended June 30, 2024, and the U.S.

statutory rate of 21.0 percent is due to the unfavorable impact of state and local income taxes, nondeductible compensation and foreign income inclusions with offsetting tax credits, partially offset by the stock compensation windfall benefit for shares which vested and the mix of earnings in jurisdictions with differing tax rates.

The following discussion of condensed consolidated results of operations refers to the twenty-six weeks ended June 29, 2025 compared to the twenty-six weeks ended June 30, 2024.

Twenty-six Weeks Ended June 29, 2025 Compared to the Twenty-six Weeks Ended June 30, 2024

Twenty-six Weeks Ended

Dollars presented in millions) June 29,

2025 $ change % change June 30,

The effective income tax rates for the thirteen weeks ended September 28, 2025 and September 29, 2024, were 22.6 percent and 26.1 percent , respectively.

The net decrease in the effective tax rate between the periods is primarily due to favorable changes in foreign exclusions, lower state and local income taxes, return-to-provision adjustments, and foreign income inclusions with offsetting tax credits.

These were partially offset by increases in the valuation allowance and nondeductible compensation.

The difference between our effective income tax rate for the thirteen weeks ended September 28, 2025 , and the U.S.

statutory rate of 21.0 percent is primarily due to the unfavorable impact of nondeductible compensation, state and local income taxes, increases in the valuation allowance and foreign income inclusions net of foreign tax credits.

These were partially offset by foreign exclusions and favorable return-to-provision adjustments .

The difference between our effective income tax rate for the thirteen weeks ended September 29, 2024, and the U.S.

statutory rate of 21.0 percent is primarily due to the unfavorable impact of state and local income taxes, nondeductible compensation, nondeductible acquisition-related transaction costs and foreign income inclusions with offsetting tax credits.

These were partially offset by favorable return-to-provision adjustments and the mix of earnings in jurisdictions with differing tax rates.

The following discussion of condensed consolidated results of operations refers to the thirty-nine weeks ended September 28, 2025 compared to the thirty-nine weeks ended September 29, 2024.

Thirty-nine Weeks Ended September 28, 2025 Compared to the Thirty-nine Weeks Ended September 29, 2024

Thirty-nine Weeks Ended

Dollars presented in millions) September 28,

2025 $ change % change September 29,

NET SALES $ 2,090.1 $ 57.4 2.8 % $ 2,032.7

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Amortization of intangible assets 19.2 5.5 40.1 % 13.7

Restructuring charges 11.3 8.1 n/m (1)

Restructuring charges 13.9 2.9 26.4 % 11.0

OPERATING INCOME 146.1 (52.1) (26.3) % 198.2

Interest expense 56.5 1.8 3.3 % 54.7

Other income, net (0.2) 3.0 (93.8) % (3.2)

Other income, net (0.1) 4.9 n/m (1)

INCOME BEFORE TAXES 89.7 (58.8) (39.6) % 148.5

2 unchanged sentences

(1) Not meaningful.

Net sales were $1,391.2 million for the twenty-six weeks ended June 29, 2025 compared to $1,314.6 million for the twenty-six weeks ended June 30, 2024, an increase of $76.6 million, or 5.8 percent.

The first half of 2025 includes $131.5 million of incremental sales related to the Supreme acquisition.

Excluding the impact of Supreme, the $54.9 million decrease in net sales from the twenty-six weeks ended June 30, 2024 was driven primarily by lower sales unit volume of $83.1 million, partially offset by the favorable combined net impact of price and mix on our overall average selling price of $29.5 million.

Overall end market demand was weaker in the first half of 2025 compared to the first half of 2024 in the repair and remodel and single-family new construction markets.

Foreign currency impact was unfavorable by $1.3 million during the twenty-six weeks ended June 29, 2025 as compared to the twenty-six weeks ended June 30, 2024.

Compared to the twenty-six weeks ended June 30, 2024, net sales to dealers, whose end customers include builders, professional trades and home remodelers, increased $95.4 million, or 14.3 percent, and net sales to retailers, including through their respective retail internet website portals, declined $28.1 million, or 5.9 percent.

Net sales were $2,090.1 million for the thirty-nine weeks ended September 28, 2025 compared to $2,032.7 million for the thirty-nine weeks ended September 29, 2024, an increase of $57.4 million, or 2.8 percent.

The higher net sales from the thirty-nine weeks ended September 29, 2024 was driven primarily by the acquisition of Supreme in July of 2024, which contributed $131.5 million of incremental sales in the first half of 2025.

Excluding the impact of Supreme, the $74.1 million decrease in net sales from the thirty-nine weeks ended September 29, 2024 was driven primarily by lower sales unit volume of $121.4 million, partially offset by the favorable combined net impact of price and mix on our overall average selling price of $48.8 million.

Overall end market demand was weaker in the first three quarters of 2025 compared to the first three quarters of 2024 in the repair and remodel and single-family new construction markets.

Foreign currency impact was unfavorable by $1.5 million during the thirty-nine weeks ended September 28, 2025 as compared to the thirty-nine weeks ended September 29, 2024.

Compared to the thirty-nine weeks ended September 29, 2024, net sales to dealers, whose end customers include builders, professional trades and home remodelers, increased $93.8 million, or 8.8 percent, and net sales to retailers, including through their respective retail internet website portals, declined $47.3 million, or 6.7 percent.

Net sales directly to builders increased $10.9 million, or 4.1 percent.

Cost of products sold

Cost of products sold increased by $70.4 million, or 8.0 percent, to $949.3 million (68.2 percent of net sales) in the twenty-six weeks ended June 29, 2025 as compared to $878.9 million (66.9 percent of net sales) in the twenty-six weeks ended June 30, 2024.

The inclusion of Supreme in the twenty-six weeks ended June 29, 2025 resulted in an incremental $86.4 million of cost of products sold.

Cost of products sold increased by $71.0 million, or 5.2 percent, to $1,430.0 million (68.4 percent of net sales) in the thirty-nine weeks ended September 28, 2025 as compared to $1,359.0 million (66.9 percent of net sales) in the thirty-nine weeks ended September 29, 2024.

The inclusion of Supreme in the thirty-nine weeks ended September 28, 2025 resulted in an incremental $86.4 million of cost of products sold for the first half of 2025.

Excluding the impact of Supreme, the $15.4 million decrease in cost of products sold was driven primarily by lower sales unit volume of $82.2 million, partially offset by the combined net impact of costs and mix of $66.8 million.

In the first half of 2025, realized savings from various cost reduction actions were more than offset by higher manufacturing costs, including unfavorable fixed cost leverage .

In the first three quarters of 2025, realized savings from various cost reduction actions were more than offset by higher manufacturing costs, including unfavorable fixed cost leverage and gross tariffs .

Selling, general and administrative expenses

Selling, general and administrative expenses increased by $28.9 million, or 10.2 percent, to $313.4 million (22.5 percent of net sales) in the twenty-six weeks ended June 29, 2025 compared to $284.5 million (21.6 percent of net sales) in the twenty-six weeks ended June 30, 2024.

The increase in the twenty-six weeks ended June 29, 2025 is primarily due to the inclusion of Supreme ($26.1 million), increased associate-related costs, net of lower variable compensation ($3.1 million) and increased advertising costs ($2.3 million).

These increases were partially offset by lower distribution and commission costs ($2.9 million), as a result of the decrease in sales unit volume, and lower acquisition-related costs ($1.0 million).

Selling, general and administrative expenses increased by $30.1 million, or 6.7 percent, to $480.9 million (23.0 percent of net sales) in the thirty-nine weeks ended September 28, 2025 compared to $450.8 million (22.2 percent of net sales) in the thirty-nine weeks ended September 29, 2024.

The increase in the thirty-nine weeks ended September 28, 2025 is primarily due to the inclusion of Supreme during the first half of 2025 ($26.1 million), continued investments in our strategic initiatives ($6.2 million), specifically digital and technology investments and marketing and increased associate-related costs, net of lower variable compensation ($3.2 million).

These increases were partially offset by lower distribution and commission costs ($5.4 million), as a result of the decrease in sales unit volume.

Restructuring charges

Restructuring charges were $11.3 million in the twenty-six weeks ended June 29, 2025, as compared to restructuring charges of $3.2 million in the twenty-six weeks ended June 30, 2024.

Restructuring charges were $13.9 million in the thirty-nine weeks ended September 28, 2025, as compared to restructuring charges of $11.0 million in the thirty-nine weeks ended September 29, 2024.

Charges in both periods are largely related to severance costs and other employee-related costs in order to better align our workforce with our forecasted demand within our manufacturing footprint.

Interest expense

Interest expense was $38.3 million in the twenty-six weeks ended June 29, 2025 as compared to $34.7 million in the twenty-six weeks ended June 30, 2024.

The increase in interest expense for the twenty-six weeks ended June 29, 2025 is due to the higher outstanding debt balance in 2025 as a result of the debt refinancing transaction in the second quarter of 2024 associated with the acquisition of Supreme.

Interest expense was $56.5 million in the thirty-nine weeks ended September 28, 2025 as compared to $54.7 million in the thirty-nine weeks ended September 29, 2024.

The increase in interest expense for the thirty-nine weeks ended September 28, 2025 is due to the higher average outstanding debt balance during the thirty-nine weeks ended September 28, 2025 as a result of the debt refinancing transaction in the second quarter of 2024 associated with the acquisition of Supreme.

The second quarter of 2024 includes $6.5 million of nonrecurring interest expense in connection with the debt refinancing transaction, including the write-off of deferred financing fees.

Other income, net

Other income, net was $0.2 million in the twenty-six weeks ended June 29, 2025, a decline of $3.0 million as compared to other income, net of $3.2 million in the twenty-six weeks ended June 30, 2024.

This decrease was due primarily to lower transactional foreign currency gains in the first half of 2025, as compared to the first half of 2024, due to fluctuations in exchange rates.

Our condensed consolidated income before taxes, income tax expense, and effective tax rate for the twenty-six week periods ended June 29, 2025 and June 30, 2024 were as follows:

Twenty-six Weeks Ended

Dollars presented in millions) June 29,

2025 June 30,

Other income, net was $0.1 million in the thirty-nine weeks ended September 28, 2025, a decline of $4.9 million as compared to other income, net of $5.0 million in the thirty-nine weeks ended September 29, 2024.

This decrease was due primarily to lower transactional foreign currency gains in the first three quarters of 2025, as compared to the first three quarters of 2024, due to fluctuations in exchange rates.

Our condensed consolidated income before taxes, income tax expense, and effective tax rate for the thirty-nine week periods ended September 28, 2025 and September 29, 2024 were as follows:

Thirty-nine Weeks Ended

Dollars presented in millions) September 28,

2025 September 29,

Income before taxes $ 89.7 $ 148.5

1 unchanged sentence

Effective tax rate 23.4 % 24.6 %

The effective income tax rates for the twenty-six weeks ended June 29, 2025 and June 30, 2024, were 23.7 percent and 24.1 percent, respectively.

The net decrease in effective tax rate between the periods is primarily due to lower state and local income taxes, changes in foreign exclusions and favorable return-to-provision adjustments, partially offset by an increase in the valuation allowance and a reduction in the stock compensation windfall benefit for shares which vested.

The difference between our effective income tax rate for the twenty-six weeks ended June 29, 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 the release of uncertain tax positions, the stock compensation windfall benefit for shares which vested, and foreign exclusions.

The difference between our effective income tax rate for the twenty-six weeks ended June 30, 2024, and the U.S.

statutory rate of 21.0 percent is due to the unfavorable impact of state and local income taxes, foreign income inclusions with offsetting tax credits and nondeductible compensation, partially offset by the stock compensation windfall benefit for shares which vested and the mix of earnings in jurisdictions with differing tax rates.

On July 4, 2025, the “One Big Beautiful Bill Act” (“OBBBA”) was enacted into U.S.

The OBBBA includes changes to several corporate tax provisions, including tax deductions for qualified research expenditures, changes to business interest expense limitations and bonus depreciation.

We are currently assessing its impact on our consolidated financial statements.

In 2024, certain jurisdictions in which we operate enacted, or announced their intention to enact, legislation consistent with one or

more Organization for Economic Co-operation and Development Global Anti-Base Erosion Model Rules (“Pillar Two”).

Further changes to our entity structure, enacted local legislation, or changes in jurisdictions in which we operate could also impact our future effective tax rate.

The effective income tax rates for the thirty-nine weeks ended September 28, 2025 and September 29, 2024, were 23.4 percent and 24.6 percent, respectively.

The net decrease in effective tax rate between the periods is primarily due to changes in foreign exclusions, lower state and local income taxes, and changes in foreign income inclusions with offsetting tax credits.

These were partially offset by increases in the valuation allowance, nondeductible compensation, reductions in favorable return-to provision adjustments and the stock compensation windfall benefit for shares which vested.

The difference between our effective income tax rate for the thirty-nine weeks ended September 28, 2025 , and the U.S.

statutory rate of 21.0 percent is primarily due to the unfavorable impact of nondeductible compensation, net changes in state and local income taxes, and increases in the valuation allowance.

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

The difference between our effective income tax rate for the thirty-nine weeks ended September 29, 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 with offsetting tax credits, nondeductible compensation and nondeductible acquisition-related transaction costs, partially offset by favorable return-to-provision adjustments , the stock compensation windfall benefit for shares which vested and the mix of earnings in jurisdictions with differing tax rates.

LIQUIDITY AND CAPITAL RESOURCES

20 unchanged sentences

The occurrence of an event of default could result in the termination of commitments under the revolving credit facility, the acceleration of all outstanding amounts thereunder and the requirement to cash collateralize outstanding letters of credit.

The Company was in compliance with all of its debt covenants under the 2024 Credit Agreement as of June 29, 2025.

As of June 29, 2025, we had $998.7 million outstanding in third-party borrowings, net of deferred financing fees.

In conjunction with the Merger, the Company plans to arrange a revolver expansion with its current banking group under the 2024 Credit Agreement in order to pay off American Woodmark debt at the close of the transaction.

Below is a summary of cash flows for the twenty-six weeks ended June 29, 2025 and June 30, 2024.

Twenty-six Weeks Ended

The Company was in compliance with all of its debt covenants under the 2024 Credit Agreement as of September 28, 2025.

As of September 28, 2025, we had $954.1 million outstanding in third-party borrowings, net of deferred financing fees.

In conjunction with the Merger, t he Company amended its credit agreement to obtain a $375.0 million term loan that will be used to settle American Woodmark’s existing indebtedness, the funding of which is dependent on the closing of the Merger.

The interest rate of the term loan is a variable rate based on SOFR and the debt will have a maturity coterminous with the existing credit agreement in June 2029.

See Note 10, "Debt," for a discussion of our original credit agreement.

Below is a summary of cash flows for the thirty-nine weeks ended September 28, 2025 and September 29, 2024.

Thirty-nine Weeks Ended

Dollars presented in millions)

2025 June 30,

September 28,

2025 September 29,

Net cash provided by operating activities

2 unchanged sentences

(40.1) (541.9)

Net cash used in financing activities

(34.0) (40.3)

Net cash (used in) provided by financing activities

Effect of foreign exchange rate changes on cash

Net (decrease) increase in cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

$ (6.2) $ (39.3)

Net cash provided by operating activities was $53.4 million in the first half of 2025 as compared to $96.1 million in the first half of 2024.

Net income contributed $50.6 million to operating cash flow in the first half of 2025, down from $82.8 million in the first half of 2024.

In the first half of 2025, accounts receivable increased $26.9 million from the seasonally lower fiscal 2024 ending balance, compared to an increase of $11.2 million in the first half of 2024, reflecting higher sales in the first half of fiscal 2025.

In the first half of 2025, inventory declined $0.2 million, as compared to an increase in inventory of $20.7 million in the first half of 2024.

The minimal change in inventory in the first half of 2025 is reflective of inventory management efforts.

In the first half of 2025, accounts payable decreased $5.5 million compared to an increase of $21.8 million in the first half of 2024.

The reduced favorability in accounts payable in 2025 was driven by the lack of growth in inventory.

Net cash used in investing activities was $24.3 million in the first half of 2025, compared to $11.9 million in the first half of 2024.

The year-over-year increase is primarily due to increased capital expenditures as compared to the prior year.

Net cash used in financing activities was $34.0 million in the twenty-six weeks ended June 29, 2025 as compared to $40.3 million in the twenty-six weeks ended June 30, 2024.

In the first half of 2025, we paid down $10 million, net on our revolving credit facility.

In the first half of 2024, our $712.5 million term loan was repaid, and replaced with $700.0 million of Senior Notes as a result of the refinancing transaction.

The first half of 2024 also included the payment of $15.2 million of financing fees associated with the refinancing transaction.

The first half of 2025 includes $18.1 million of stock repurchases as compared to $6.5 million of stock repurchases in the first half of 2024.

We believe that our cash and cash equivalent balances, along with available cash from operating cash flows and credit facilities, will be adequate to fund our typical needs, including working capital requirements and projected capital expenditures.

Net cash provided by operating activities was $108.8 million in the first three quarters of 2025 as compared to $176.9 million in the first three quarters of 2024.

Net income contributed $68.7 million to operating cash flow in the first three quarters of 2025, down from $111.9 million in the first three quarters of 2024.

In the first three quarters of 2025, accounts receivable increased $26.6 million from the seasonally lower fiscal 2024 ending balance, compared to an increase of $2.3 million in the first three quarters of 2024.

In the first three quarters of 2025, inventory declined $4.4 million, as compared to an increase in inventory of $32.5 million in the first three quarters of 2024.

The minimal change in inventory in the first three quarters of 2025 is reflective of inventory management efforts.

In the first three quarters of 2025, accounts payable decreased $2.2 million compared to an increase of $18.0 million in the first three quarters of 2024.

The reduced favorability in accounts payable in 2025 was a result of inventory management efforts.

Accrued expenses and other current liabilities declined $27.5 million in the first three quarters of 2025 as compared to a decrease of $3.5 million in 2024.

The timing of interest payments on the Company’s Senior Notes contributed to the unfavorability in 2025.

Interest payments on the Senior Notes began in 2025.

Depreciation in the first three quarters of 2025 was $51.2 million as compared to $39.5 million in the first three quarters of 2024.

The increase is due to the inclusion of Supreme for the full year-to-date period in 2025.

Net cash used in investing activities was $40.1 million in the first three quarters of 2025, compared to $541.9 million in the first three quarters of 2024.

The year-over-year decrease is due to the acquisition of Supreme, net of cash acquired, of $515.7 million and increased capital expenditures in the third quarter of 2024.

This year-over-year decrease is partially offset by increased capital expenditures as compared to the prior year.

Net cash used in financing activities was $79.8 million in the thirty-nine weeks ended September 28, 2025 as compared to net cash provided by financing activities of $331.3 million in the thirty-nine weeks ended September 29, 2024.

In the first three quarters of 2024, our $712.5 million term loan was repaid, and replaced with $700.0 million of Senior Notes as a result of the refinancing transaction completed in the second quarter.

In the first three quarters of 2024, we used $430.0 million of proceeds from the revolving credit facility provided for by the 2024 Credit Agreement to fund the Supreme acquisition, and subsequently paid down $55 million, net on our revolving credit facility.

The first three quarters of 2024 also included the payment of $17.8 million of financing fees associated with the refinancing transaction.

The first three quarters of 2025 includes $18.1 million of stock repurchases as compared to $6.5 million of stock repurchases in the first three quarters of 2024.

We also believe we have access to additional funds from capital markets to fund strategic initiatives.

9 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis