What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-13 compared with 2025-02-19 · 111 added, 195 removed, 268 unchanged (53% of the section changed)

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• Our projections of future performance, including future revenues, capital expenditures, gross margins, and cash flows;

• The effects of competition and consolidation of competitors in our industry;

• The effects of competition;

• Costs of complying with evolving tax and other regulatory requirements and the effect of actual or alleged violations of tax, environmental or other laws;

• The effect of climate change and unpredictable seasonal and weather factors;

• Conditions in the housing market in the United States and Canada;

• Conditions in the housing market in the United States, Canada and Mexico;

• The expected strength of our existing customers and consumers and any loss or reduction in business from one or more of our key customers or increased buying power of large customers;

• Information systems interruptions or intrusions or the unauthorized release of confidential information concerning customers, employees, or other third parties;

• Worldwide economic, geopolitical and business conditions and risks associated with doing business on a global basis, including risks associated with uncertain trade environments and changes to the U.S.

administration;

• Worldwide economic, geopolitical and business conditions and risks associated with doing business on a global basis, including risks associated with uncertain trade environments, changes to U.S.

tariff policy and retaliatory tariffs imposed by other countries;

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

• The inability to recognize, or delays in obtaining, anticipated benefits of the acquisition of Supreme, including synergies, which may be affected by, among other things, competition, the ability of the combined company to grow and manage growth profitably, maintain relationships with customers and suppliers and retain key employees;

• 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;

• The outcome of any legal proceedings that may be instituted against MasterBrand or American Woodmark following the announcement of the Transaction;

• The inability to complete the Transaction;

• 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 Supreme;

• Diversion of management time on acquisition-related issues;

• The reaction of customers and other persons to the acquisition of Supreme;

• 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 Transaction;

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

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This section provides a general description of our business, as well as recent developments we believe are important in understanding our results of operations and financial condition or in understanding anticipated future trends.

• Separation from Fortune Brands :

This section provides a general discussion of our Separation from Fortune Brands.

• Basis of Presentation :

This section provides a discussion of the basis on which our consolidated financial statements were prepared, including our historical results of operations and adjustments thereto, primarily allocations of general corporate expenses from Fortune Brands.

• Results of Operations :

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 consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and are based on a 52- or 53-week fiscal year ending on the last Sunday in December in each calendar year.

This section provides an analysis of our results of operations for the 52-week period that ended on December 28, 2025 as compared to the 52-week period that ended on December 29, 2024.

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

On December 14, 2022, our former parent company, Fortune Brands, completed a tax free spin-off transaction to separate its Cabinets segment into a standalone publicly-traded company.

The Separation was completed through a series of transactions ending with a pro rata distribution of all of the shares of MasterBrand, Inc.

common stock owned by Fortune Brands to Fortune Brands shareholders, after which we became an independent, publicly-traded company.

Separating the former Cabinets segment of Fortune Brands into a standalone publicly-traded company significantly enhanced the long-term growth and return prospects of our Company and offers substantially greater long-term value to shareholders, customers and associates.

On July 10, 2024, we acquired all of the issued and outstanding limited liability interests of Dura Investment Holdings LLC, parent company of Supreme, a cabinetry company, from GHK Capital Partners LP.

Supreme is a domestic manufacturer of residential cabinetry with a portfolio of product lines significantly focused on premium products.

Supreme was a domestic manufacturer of residential cabinetry with a portfolio of product lines significantly focused on premium products.

Supreme, with manufacturing facilities located in Minnesota, Iowa and North Carolina, and its two brands, Dura Supreme and Bertch cabinetry, crafts framed and frameless cabinetry for a nationwide network of dealers.

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

Separation from Fortune Brands

On April 28, 2022, Fortune Brands announced that its Board of Directors approved in principle the Separation.

The Cabinets segment of Fortune Brands had historically been operated by MasterBrand Cabinets, Inc.

In July 2022, Fortune Brands incorporated MasterBrand, Inc.

in the State of Delaware and subscribed to all of the shares of MasterBrand, Inc.’s common stock upon its incorporation.

After the incorporation of MasterBrand, Inc., the following occurred:

(1) Fortune Brands contributed all of the issued and outstanding shares of capital stock of MBCI to MasterBrand, Inc., resulting in MBCI becoming a wholly-owned subsidiary of MasterBrand, Inc.

through a transaction between entities under common control;

and (2) MBCI was converted into a Delaware limited liability company, MasterBrand Cabinets LLC (collectively, the “Reorganization”).

On December 14, 2022, the Separation was completed via the Distribution.

On December 14, 2022, the date of Separation, 128.0 million shares of MasterBrand, Inc.

common stock were issued.

Fortune Brands shareholders received one share of MasterBrand, Inc.

common stock for each share of Fortune Brands common stock held on the record date.

Following the Distribution, Fortune Brands stockholders owned 100 percent of the shares of MasterBrand, Inc.

common stock, and MasterBrand, Inc.

became an independent, publicly-traded company, listed under the symbol “MBC” on the New York Stock Exchange beginning December 15, 2022.

All share and per share amounts for the period presented in the consolidated financial statements, as discussed in further detail in Note 6, "Earnings Per Share," of our audited consolidated financial statements within this Annual Report on Form 10-K have been retroactively recast to reflect the effects of the changes in equity structure resulting from the Reorganization, Separation and Distribution.

The historical activity of the Company is that of MBCI prior to the Reorganization.

The Company’s equity structure prior to the Separation and Distribution included 5,000 shares of MasterBrand, Inc.

common stock authorized and 100 shares issued.

Prior to the incorporation of MasterBrand, Inc.

in July 2022, the equity structure of MBCI included 1,000 authorized and issued shares of common stock.

MasterBrand, Inc.

is the registrant and the financial reporting entity following the consummation of the Separation and Distribution.

In order to govern the ongoing relationships between MasterBrand, Inc.

and Fortune Brands after the Separation and to facilitate an orderly transition, the parties entered into a series of agreements including the following:

• Separation and Distribution Agreement – sets forth the principal actions to be taken in connection with the Separation, including the transfer of assets and assumption of liabilities, among others, and sets forth other agreements governing aspects of the relationship between MasterBrand and Fortune Brands.

• Tax Allocation Agreement – governs the respective rights, responsibilities and obligations of MasterBrand and Fortune Brands with respect to tax liabilities and benefits, tax attributes, tax contests and other matters regarding income taxes, non-income taxes and related tax returns.

• Employee Matters Agreement – addresses certain employment, compensation and benefits matters, including the allocation and treatment of certain assets and liabilities relating to MasterBrand associates.

Separating the former Cabinets segment into a standalone publicly-traded company significantly enhances the long-term growth and return prospects of our Company and offers substantially greater long-term value to stockholders, customers and associates.

Moreover, separating the Cabinets segment into an independent, standalone company with publicly-traded stock provides our Company with a number of benefits, including:

• Strategic and Management Focus :

The Separation enables our management team to better focus on strengthening our market-leading business and pursue targeted opportunities for long-term growth, profitability and value creation.

Like many of our competitors and peers, we believe that we will be more effective in managing our capital structure with credit tied more specifically to its industry and business performance and achieving greater margin expansion by focusing on our operational effectiveness specific to its products.

A dedicated management team and board of directors streamlines operational and strategic decision-making, and ensures management incentives are optimized and aligned with our strategic priorities and financial objectives are in line with our industry.

• Resource Allocation and Capital Deployment :

The Separation provides us with an opportunity to implement a tailored capital structure that ties specifically to our industry and business that provides greater financial and operational flexibility and increased agility.

We are better positioned to more effectively allocate resources to address unique operating needs relating to our manufacturing and marketing requirements within our specific markets, invest in strategic priorities that will maximize long-term potential and manage capital return strategies.

Our unique operating needs are tailored towards enhancing the standardization of our processes, including with respect to our supply chain, and the specific manufacturing needs of our products and strengthening our lean manufacturing capabilities.

The Separation provides an opportunity for us to more effectively focus on these unique operating needs and markets.

• Distinct Investment Opportunities and Investor Choice :

The Separation creates a compelling investment opportunity for investors based on our unique operating model and financial profile.

It also provides investors with enhanced insight into our distinct value drivers and allows for more targeted investment decisions.

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 and have been principally derived from the consolidated financial statements of our Company and its consolidated subsidiaries using the historical results of operations, and historical basis of assets and liabilities.

Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Our historical financial statements through the date of Separation include allocations of expenses related to certain Fortune Brands corporate functions, including information technology, finance, executive, human resources, supply chain, internal audit, governance and legal services.

These expenses have been allocated based on direct usage or benefit where specifically identifiable, with the remainder allocated on a proportional cost allocation method based primarily on net sales, associate headcount or number of facilities, as applicable.

Prior to the Separation, total expenses allocated for our 2022 fiscal year was $92.5 million.

Of these allocations, $72.4 million was not previously allocated to us for our 2022 fiscal year.

Such amounts are primarily included within selling, general and administrative expenses in our consolidated statements of income.

We consider the expense methodology and resulting allocation to be reasonable for the period presented;

however, the allocations may not be indicative of actual expenses that would have been incurred had we operated as an independent, publicly-traded company during the period presented.

Actual costs that we may have incurred had we been a standalone company during the period presented would depend on a number of factors, including the chosen organizational structure, whether functions were outsourced or performed by our associates and strategic decisions made in areas such as manufacturing, selling and marketing, research and development, information technology and infrastructure.

Accordingly, historical allocations may not be indicative of future costs we incur operating as an independent, publicly-traded company.

The income tax amounts in our consolidated financial statements have been calculated on a separate return method and presented as if our operations were separate taxpayers in the respective jurisdictions.

For the period prior to the Separation in 2022, including the Separation, federal and state income tax payments and refunds were paid and received by Fortune Brands on our behalf.

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

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

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

We are now incurring certain costs as a standalone public company, including services provided by our own resources or through third-party service providers relating to corporate functions, including information technology, finance, executive, human resources, supply chain, internal audit, governance and legal services, as well as ongoing additional costs associated with operating as an independent, publicly-traded company.

All transactions between us and Fortune Brands previously resulting in related party balances were settled in our consolidated financial statements immediately prior to the Distribution, or were settled shortly thereafter, including by making a distribution of capital by us to Fortune Brands of any remaining related party receivable owed by Fortune Brands to us.

For more information regarding related party transactions with Fortune Brands, see Note 21, "Related Party Transactions," of our audited consolidated financial statements within this Annual Report on Form 10-K.

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

Our cash and cash equivalents on our consolidated balance sheets represent cash balances held in bank accounts owned by us and our consolidated subsidiaries.

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

All borrowings attributable to our business and due to Fortune Brands were recorded as “related party payable” in our consolidated balance sheets and classified as current or noncurrent based on loan maturity dates.

Fortune Brands’ third-party debt and related interest expense have not historically been attributed to us as we were not the legal obligor of the debt, and the borrowings are not specifically identifiable to us.

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

On August 6, 2025, we announced the execution of a definitive agreement whereby the Company will combine with American Woodmark in an all-stock transaction.

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 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.

In February 2026, we announced plans to implement $30 million dollars of planned cost reductions.

The cost reductions, which will primarily be in selling, general and administrative expenses, will begin in the first quarter of 2026, with full realization expected by the end of fiscal 2026.

Recent Developments

The Company continues to actively monitor recent trade policy and tariff announcements, including the recently announced Section 232 tariffs on timber, lumber, and derivative wood products (including kitchen cabinets, vanities and related wood products), effective October 14, 2025.

As a result of the Section 232 proceedings, a 10 percent tariff applies to softwood lumber and timber imports, and a 25 percent tariff applies to kitchen cabinets and vanities, although the tariff on cabinets and vanities may increase after January 1, 2027.

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.

We continue 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 reduced 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 and 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 related to the American Woodmark transaction, enacted local legislation, or changes in jurisdictions in which we operate could also impact our effective tax rate in fiscal 2026.

Results of Operations

The following discussion includes a comparison of results of operations for the fifty-two weeks ended December 29, 2024 compared to the fifty-three weeks ended December 31, 2023.

The following discussion includes a comparison of results of operations for the fifty-two weeks ended December 28, 2025 compared to the fifty-two weeks ended December 29, 2024.

For comparisons of our 2024 fiscal year compared to our 2023 fiscal year, please refer to the heading “Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024, as filed with the SEC.

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Gain on sale of asset — 4.3 n/m (1)

Other (income) expense, net (2.3) (4.7) n/m (1)

Other income, net (1.4) 0.9 (39.1 %) (2.3)

INCOME BEFORE TAXES

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(1) Not meaningful.

Net sales were $2,700.4 million for 2024 compared to $2,726.2 million for 2023, a decrease of $25.8 million, or 0.9 percent.

The second half of 2024 includes $121.2 million of incremental sales related to the Supreme acquisition.

Excluding the impact of Supreme, the $147.0 million decrease in net sales in 2024 compared to 2023 was driven primarily by the combined net impact of price and mix on our overall average selling price, which accounted for 77.0 percent of the decrease, while lower sales unit volume represented 23.0 percent of the decrease from 2023 to 2024.

Overall end-market demand was softer in 2024 as compared to 2023 in the repair and remodel markets, while single-family new construction strengthened in 2024.

Net sales were $2,734.7 million for 2025 compared to $2,700.4 million for 2024, an increase of $34.3 million, or 1.3 percent.

The higher net sales from 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 $97.2 million decrease in net sales from 2024 was driven primarily by lower sales unit volume of $156.5 million, partially offset by the favorable combined net impact of price and mix on our overall average selling price of $60.7 million.

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

Foreign currency impact was unfavorable by $1.4 million during 2025 as compared to 2024.

Compared to 2023, net sales to dealers, whose end customers include builders, professional trades and home remodelers, declined $25.2 million, or 1.7 percent, and net sales to retailers, including through their respective retail internet website portals, declined $39.4 million, or 4.1 percent.

Net sales directly to builders increased $38.8 million, or 12.4 percent.

Compared to 2024, net sales to dealers, whose end customers include builders, professional trades and home remodelers, increased $79.1 million, or 5.6 percent, driven by the incremental sales from a full year of Supreme.

Net sales to retailers, including through their respective retail internet website portals, declined $49.2 million, or 5.3 percent, and net sales directly to builders increased $4.4 million, or 1.3 percent.

Cost of products sold

Cost of products sold decreased by $1.4 million, or 0.1 percent, to $1,823.4 million (67.5 percent of net sales) in 2024 as compared to $1,824.8 million (66.9 percent of net sales) in 2023.

The inclusion of Supreme in the second half of 2024 resulted in an incremental $83.4 million of cost of products sold.

Excluding the impact of Supreme, the $84.8 million decrease in cost of products sold was driven primarily by the combined net impact of costs and mix, which accounted for 74.0 percent of the decrease, while lower sales unit volume represented 26.0 percent of the $84.8 million decrease.

Year-over-year increases in realized savings from various cost reduction actions and carry over deflation in commodity costs and inbound transportation contributed to the decreased net impact of costs and mix.

Additionally, 2023 included $9.4 million of incremental costs, less $7.4 million of insurance recoveries, related to the tornado that occurred during the first quarter of 2023 at our Jackson, Georgia facility.

Cost of products sold increased by $83.7 million, or 4.6 percent, to $1,907.1 million (69.7 percent of net sales) in 2025 as compared to $1,823.4 million (67.5 percent of net sales) in 2024.

The inclusion of Supreme during the first half of 2025 resulted in an incremental $86.4 million of cost of products sold.

Excluding the impact of Supreme, the $2.7 million decrease in cost of products sold was driven primarily by lower sales unit volume of $105.6 million, partially offset by the combined net impact of costs and mix of $102.9 million.

In 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 $64.7 million, or 10.7 percent, to $667.8 million (24.4 percent of net sales) in 2025 compared to $603.1 million (22.3 percent of net sales) in the prior year.

The increase in 2024 is primarily due to increased acquisition-related costs ($25.4 million) associated with the acquisition of Supreme, the inclusion of Supreme ($24.4 million) and increased associate-related costs, net of lower variable compensation ($9.1 million).

The increase in 2025 is primarily due to the inclusion of Supreme during the first half of 2025 ($26.1 million), increased associate-related costs, net of lower variable compensation ($10.2 million), continued investments in our strategic initiatives ($7.9 million), specifically digital and technology investments and marketing, and increased professional support fees ($1.9 million).

2025 also includes increased bad debt expense of $17.4 million, primarily due to a charge in the fourth quarter resulting from the Company’s assessment of the collectability of a specific customer’s receivable balance of $17.1 million.

These increases were partially offset by lower distribution and commission costs ($3.3 million), as a result of the decrease in sales unit volume.

In 2023, we incurred $2.4 million of costs directly related to the separation from Fortune Brands.

Restructuring charges

Restructuring charges were $15.2 million in 2025 as compared to $18.0 million in 2024.

Charges in 2024 include severance costs and other associate-related costs in order to better align our workforce with our forecasted demand within our manufacturing footprint.

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

Restructuring charges in 2023 are largely related to severance costs and other associate-related costs, as well as an asset impairment charge resulting from the decision to permanently close a previously idled manufacturing facility.

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 $74.0 million in 2024, as compared to $65.2 million in 2023 .

The increase in interest expense is due to the higher outstanding debt balance in 2024 as a result of the second quarter debt refinancing transaction.

Interest expense was $74.1 million in 2025, which was comparable to $74.0 million in 2024 .

Our 2025 interest expense reflects a higher outstanding debt balance throughout 2025 as a result of the second quarter 2024 debt refinancing transaction.

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

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The facility sold for a purchase price of $6.6 million, resulting in a $4.3 million gain.

Other (income) expense, net

Other income, net was $2.3 million in 2024 compared to other expense, net of $2.4 million in 2023.

The increase was due primarily to transactional foreign currency gains recorded in 2024, partially offset by increased pension costs, including $2.9 million of settlement charges resulting from the termination of our defined benefit pension plan.

Other income, net

Other income, net was $1.4 million in 2025, a decline of $0.9 million as compared to other income, net of $2.3 million in 2024.

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

Our consolidated income tax expense, income before taxes, and effective tax rate for the fiscal years ended December 28, 2025 and December 29, 2024 were as follows:

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Effective tax rate 42.3 % 25.2 %

In 2025, the Company recorded a valuation allowance charge of $4.4 million primarily based on an inability to demonstrate that sufficient future foreign-source taxable income in the general basket category will be available to absorb foreign tax credit carryovers within the ten-year carryforward period.

The Company also had nondeductible acquisition-related transaction costs incurred as a result of the pending merger with American Woodmark, which resulted in additional income tax expense of $4.3 million in 2025.

For 2025, the Company’s effective tax rate was 42.3 percent, compared to an effective tax rate of 25.2 percent for 2024.

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

The increase in the effective tax rate between the periods was primarily due to the increase in the valuation allowance and nondeductible acquisition-related transaction costs, as well as changes in foreign income inclusions and changes in book income, partially offset by lower state and local income taxes and the mix of earnings in jurisdictions with differing tax rates.

The 2025 effective income tax rate of 42.3 percent compared to the U.S.

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

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

federal statutory rate of 21.0 percent was primarily the result of the increase in the valuation allowance and nondeductible acquisition-related transaction costs, as well as changes in foreign income inclusions, nondeductible compensation and net changes in state and local income taxes, partially offset by tax credits and the mix of earnings in jurisdictions with differing tax rates.

The 25.2 percent effective income tax rate for 2024 was unfavorably impacted by net changes in state and local income taxes and foreign income taxed at higher rates.

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Our primary liquidity needs have historically been to support working capital requirements and fund capital expenditures.

Subsequent to the Separation, we may have liquidity needs to finance acquisitions and return cash to stockholders, such as the 2024 acquisition of Supreme.

Historically, prior to Separation, our principal sources of liquidity were cash on hand, cash flows from operating activities and financial support from Fortune Brands via participation in Fortune Brands’ centralized approach to treasury management, including financing and cash management activities.

Subsequent to the Separation, we implemented our own centralized approach to treasury, including cash management performed through cash pooling arrangements.

We may have liquidity needs to finance acquisitions and return cash to shareholders, such as the 2024 acquisition of Supreme and the pending American Woodmark transaction.

We have a centralized approach to treasury, including cash management performed through cash pooling arrangements.

Certain of our entities have standalone cash accounts that are not included in the centralized cash pooling arrangements.

All cash balances specifically identifiable to us are included in our consolidated balance sheets and statement of cash flows.

The cash flows presented in our consolidated statement of cash flows may not be indicative of the cash flows we would have recognized had we operated as a standalone publicly-traded company for the period presented prior to the Separation.

Our operating income is generated by our subsidiaries.

There are generally no restrictions on the ability of our subsidiaries to pay dividends or make other distributions to MasterBrand, other than the fact our subsidiaries have financial obligations that must be satisfied before funding us and such dividends are subject to applicable local law and may be limited due to terms of other contractual arrangements, including our indebtedness.

We periodically review our portfolio of brands, manufacturing and supply chain footprint, and evaluate potential strategic transactions to increase stockholder value.

We periodically review our portfolio of brands, manufacturing and supply chain footprint, and evaluate potential strategic transactions to increase shareholder value.

However, we cannot predict whether or when we may enter into acquisitions, joint ventures or dispositions, or what impact any such transactions could have on our results of operations, cash flows or financial condition.

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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) to pay all fees and expenses related to the foregoing transactions.

In July 2024, upon closing, we funded the acquisition with a combination of cash on hand and $430.0 million of proceeds from the revolving credit facility provided for by the 2024 Credit Agreement (see Note 12, "Debt," for further details).

In July 2024, upon closing, we funded the Supreme acquisition with a combination of cash on hand and $430.0 million of proceeds from the revolving credit facility provided for by the 2024 Credit Agreement (see Note 12, "Debt," for further details).

The Senior Notes were issued under the Indenture dated as of June 27, 2024 (the “Indenture”) and will mature on July 15, 2032.

Interest on the Senior Notes will accrue 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.

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.

The Indenture contains certain covenants, including, but not limited to, limitations and restrictions on the ability of the Company and its restricted subsidiaries (as defined in the Indenture) to (i) incur additional indebtedness and guarantee indebtedness, (ii) make restricted payments, (iii) create, incur or assume liens or use assets as security in other transactions, (iv) merge, consolidate, or sell, transfer, lease or dispose of substantially all of their assets, (v) sell or transfer certain assets, (vi) enter into or conduct transactions with affiliates of the Company and (vii) agree to certain restrictions or encumbrances on the ability of restricted subsidiaries to pay dividends, make loans or advances, or to otherwise transfer property or assets to the Company or other restricted subsidiaries.

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Interest rates on the revolving credit facility are variable based on the Secured Overnight Financing Rate (“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 the Administrative Agent (as defined in the 2024 Credit Agreement) 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 Company also pays customary agency fees and a commitment fee based on the daily unused portion of the revolving credit facility ranging from 0.20 percent to 0.30 percent per annum, depending on its net leverage ratio.

The 2024 Credit Agreement contains customary representations and warranties, affirmative covenants and restrictive covenants.

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

The Company amended its 2024 Credit Agreement on November 3, 2025 to obtain $375.0 million of delayed draw term loan commitments that will be used to repay and terminate American Woodmark’s existing indebtedness, the funding of which is dependent on the closing of the Merger.

The interest rate of the delayed draw term loans is a variable rate based on the Secured Overnight Financing Rate (“SOFR”), plus, a margin depending on the Company’s net leverage ratio.

The delayed draw term loans will have a maturity coterminous with the revolving credit facility under the 2024 Credit Agreement in June 2029, and the amendment did not result in any material changes to the covenants in place under the 2024 Credit Agreement.

As of December 28, 2025 , we had $974.5 million outstanding in third-party borrowings, net of deferred financing fees.

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Net cash (used in) provided by financing activities (65.7) 269.6

Effect of foreign exchange rate changes on cash (7.9) (1.2)

Net (decrease) increase in cash, cash equivalents and restricted cash $ (27.1) $ 47.6

Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash 6.7 (7.9)

Net increase (decrease) in cash, cash equivalents and restricted cash $ 62.3 $ (27.1)

Fiscal 2025 as compared to Fiscal 2024

Net cash provided by operating activities decreased to $195.7 million in 2025 as compared to $292.0 million in 2024.

The decrease in operating cash flows was partially driven by the Company’s decreased net income in 2024 of $125.9 million, as compared to net income of $182.0 million in 2023.

In 2024, accounts receivable generated $21.7 million of cash, compared to 2023, which generated $88.1 million of cash.

Our increased cash generation in accounts receivable in 2023 was a result of improvements in our collection processes throughout 2023, which we maintained in 2024.

In 2024, the movement in inventory was $10.7 million unfavorable, reflective of the normal seasonal build in inventory from year-end.

2023 had favorable movement in inventory of $123.6 million.

In 2022, we executed an intentional build in inventory in order to mitigate the impact of an uncertain and volatile global supply chain environment.

The favorable inventory movement in 2023 reflected our efforts to more efficiently manage our inventory levels in the supply chain environment.

Accounts payable was $23.8 million favorable in 2024, partially due to the increased purchasing associated with the higher inventory balance from year-end, as compared to unfavorable accounts payable movement of $69.4 million in 2023 as a result of decreased purchasing levels aligned with our inventory management.

Restructuring charges, net of cash payments, were $10.5 million favorable in 2024 as compared to $9.4 million unfavorable in 2023 due to the timing of actions and associated cash impact.

Net income contributed $26.7 million to operating cash flow in 2025, down from $125.9 million in 2024.

In 2025, accounts receivable decreased $24.0 million as a result of lower net sales and improved timing of cash collections in the fourth quarter of 2025, compared to a decrease of $21.3 million in 2024.

In 2025, inventory declined $8.0 million as a result of inventory management efforts, as compared to an increase in inventory of $10.7 million in 2024.

In 2025, accounts payable increased $15.7 million compared to an increase of $23.8 million in 2024.

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

Depreciation in 2025 was $67.9 million as compared to $57.1 million in 2024.

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

Net cash used in investing activities was $74.4 million in 2025, compared to net cash used in investing activities of $580.8 million in 2024.

The year-over-year increase is due to the acquisition of Supreme, net of cash acquired, of $514.5 million and increased capital expenditures as compared to the prior year due to Supreme integration efforts and incremental tech-enabled initiatives.

These increases were partially offset by the proceeds from the sale of former manufacturing warehouse facility sites in 2024.

Net cash provided by financing activities was $269.6 million in 2024 as compared to net cash used of $299.9 million in 2023.

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

Additionally, we used $470.0 million of proceeds from the revolving credit facility provided for by the 2024 Credit Agreement to fund the Supreme acquisition.

We have subsequently paid down $150.0 million on the revolving credit facility through the usage of cash flow from operations in the second half of 2024.

We also paid $17.8 million of financing fees in 2024 related to the refinancing transaction.

In 2023, we used strong cash flows from operations to pay down $272.5 million of debt.

Capital expenditures were comparable in 2025 ($78.2 million) versus 2024 ($80.9 million).

Fiscal 2024 included the acquisition of Supreme, net of cash acquired, of $514.5 million.

Fiscal 2024 also included the proceeds from the sale of former manufacturing warehouse facility sites.

Net cash used in financing activities was $65.7 million in 2025 as compared to net cash provided of $269.6 million in 2024.

In 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 of 2024.

In 2024, we used $470.0 million of proceeds from the revolving credit facility provided for by the 2024 Credit Agreement to fund the Supreme acquisition, and subsequently paid down $150.0 million, net on our revolving credit facility.

Fiscal 2024 also included the payment of $17.8 million of financing fees associated with the refinancing transaction, as compared to $1.8 million in 2025.

In 2025, we paid down $35.0 million, net, on our revolving credit facility.

Fiscal 2025 includes $18.1 million of stock repurchases as compared to $6.5 million of stock repurchases in 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.

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In accordance with our policy, our allowance for credit losses was $17.4 million and $3.0 million as of December 28, 2025 and December 29, 2024 , respectively.

The conditions in the global economy and ongoing market volatility may reduce our customers’ ability to access sufficient liquidity and capital to fund their operations and make our estimation of customer defaults inherently uncertain.

The Company increased the allowance for doubtful accounts by $17.1 million as a result of the Company’s assessment of the collectability of a specific customer’s receivable balance as of December 28, 2025.

The charge, which relates entirely to sales recognized in 2025, was based upon the Company’s assessment of the customer’s specific facts and circumstances, including its financial outlook and liquidity.

Overall, t he conditions in the global economy and ongoing market volatility may reduce our customers’ ability to access sufficient liquidity and capital to fund their operations and make our estimation of customer defaults inherently uncertain.

While we believe current allowances for credit losses are adequate, it is possible that continued weak economic conditions may cause significantly higher levels of customer defaults and bad debt expense in future periods.

We sponsor a defined benefit pension plan.

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

The defined benefit pension plan is funded with a portfolio of investments maintained within our benefit plan trust.

As of December 29, 2024 , the aggregate fair value of our pension plan assets was $81.5 million, representing 99.1 percent of the accumulated benefit obligation liability.

During fiscal 2024, we did not make any pension contributions to the plan.

For the foreseeable future, we believe that we have sufficient liquidity to meet the minimum funding that may be required by the Pension Protection Act of 2006.

During 2023, the Board of Directors of MasterBrand, Inc.

approved a plan to terminate the defined benefit pension plan.

The termination and settlement process, which preserves retirement benefits due to participants but changes the ultimate payor of such benefits, is expected to take up to 24 months to complete, subject to receipt of customary regulatory approvals.

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

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

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

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

Contractual Obligations and Other Commercial Commitments

The following table summarizes our contractual obligations and commitments as of December 28, 2025:

Dollars presented in millions) Payment Due by Period

Total 2025 2026 2027 2028 2029 Thereafter

Payment Due by Period

Dollars presented in millions) Total 2026 2027 2028 2029 2030 Thereafter

Contractual Obligations

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Non-cancellable financing leases 5.8 2.6 1.6 1.0 0.5 0.1 —

5.1 2.4 1.6 0.7 0.2 0.2 —

Other Corporate Commercial Commitments

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The purchase obligations in the table above include contracts for raw materials and finished goods purchases, selling and administrative services and capital expenditures.

(b) Debt payments include our $700.0 million term loan and $750.0 million revolving credit facility under the 2024 Credit Agreement.

(b) Debt payments include our $700.0 million Senior Notes and $750.0 million revolving credit facility under the 2024 Credit Agreement.

In addition to the contractual obligations and commitments described above, we also had other corporate commercial commitments for which we are contingently liable as of December 28, 2025.

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• Derivative instruments that are designated as net investment hedges - The changes in fair value of the derivative instrument are recognized in the consolidated statements of income when realized upon sale or upon complete or substantially complete liquidation of the investment in the foreign entity.

Deferred currency gains of $2.1 million were reclassified into earnings for the 2025 fiscal year.

Deferred currency losses of $2.9 million were reclassified into earnings for the 2024 fiscal year.

Deferred currency gains of $10.2 million and $4.5 million were reclassified into earnings for the 2023 and 2022 fiscal years, respectively.

Based on foreign exchange rates as of December 29, 2024 , we estimate that $5.0 million of net derivative loss included in accumulated other comprehensive loss as of December 29, 2024 , will be reclassified to earnings within the next twelve months.

Deferred currency gains of $10.2 million were reclassified into earnings for the 2023 fiscal year.

Based on foreign exchange rates as of December 28, 2025 , we estimate that $4.9 million of net derivative gains included in accumulated other comprehensive income as of December 28, 2025 , will be reclassified to earnings within the next twelve months.

Foreign Currency Risk

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third-party appraisers for the values and lives of property, identifiable intangibles and inventories;

and actuaries and other third-party specialists, workers' compensation and general and product liabilities, as necessary.

and actuaries and other third-party specialists, for the values of workers' compensation and general and product liabilities, as necessary.

Transaction costs related to the acquisition of a business are expensed as incurred.

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An interim impairment test is performed if an event occurs or conditions change that would more likely than not reduce the fair value of the reporting unit below the carrying value.

To evaluate the recoverability of goodwill, we first assess qualitative factors to determine whether it is more likely than not that goodwill is impaired.

Qualitative factors include changes in volume, margin, customers and the industry.

If it is deemed more likely than not that goodwill for a reporting unit is impaired, we will perform a quantitative impairment test using a weighting of the income and market approaches.

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

To evaluate the recoverability of goodwill, we perform a quantitative impairment test using a weighting of the income and market approaches.

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

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Specifically, assumptions related to growth in the new construction and R&R market of the U.S.

home products markets drive our forecasted sales growth.

home products markets, when combined with general economic data such as inflation and interest rates, drive our forecasted sales growth.

The market forecasts are developed using independent third-party forecasts from multiple sources.

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home products market is inherently uncertain and is subject to a number of factors, such as employment rates, home prices, interest rates, credit availability, new home starts and the rate of home foreclosures.

We first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired.

Qualitative factors include changes in volume, customers and the industry.

If it is deemed more likely than not that an intangible asset is impaired, we will perform a quantitative impairment test.

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

We measure fair value of our indefinite-lived tradenames using the relief-from-royalty approach which estimates the present value of royalty income that could be hypothetically earned by licensing the brand name to a third party over the remaining useful life.

In performing our quantitative testing, we measure fair value of our indefinite-lived tradenames using the relief-from-royalty approach which estimates the present value of royalty income that could be hypothetically earned by licensing the brand name to a third party over the remaining useful life.

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

In the second quarter ended June 26, 2022, we recognized an impairment charge of $26.0 million related to an indefinite-lived tradename.

During the second quarter ended June 26, 2022, production was shifted within our manufacturing footprint to enable what we expect to be a higher value purpose and growth opportunity, which led to downward revisions to forecasted revenue growth rates associated with the tradename.

In the fourth quarter ended December 25, 2022, we incurred an additional asset impairment charge of $12.8 million related to the same indefinite-lived tradename as a result of further shifts within our product portfolio to better align with forecasted future customer demand as a result of a significant decrease in sales during the fourth quarter of 2022, driven by continued and persistent inflation, as well as elevated interest rates and economic uncertainty.

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

In 2023 and 2024, we did not recognize any impairment charges related to this indefinite-lived tradename.

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

In the fourth quarter ended December 25, 2022, we incurred an impairment charge of $7.6 million to another indefinite-lived tradename.

This was primarily due to a shift in customer demand from this tradename to a lower price point product, as a result of continued and persistent inflation as well as elevated interest rates and economic uncertainty.

In 2023 and 2024, we did not recognize any impairment charges related to this indefinite-lived tradename.

As of both December 29, 2024 and December 31, 2023, the carrying value of this tradename was $19.1 million .

The fair values of the impaired tradenames were measured using the relief-from-royalty approach.

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See Note 9, "Goodwill and Identifiable Intangible Assets," and Note 11, "Fair Value Measurements," of our audited consolidated financial statements within this Annual Report on Form 10-K, for additional information.

During our 2024, 2023 and 2022 impairment tests, we elected to bypass the qualitative test and tested all of our indefinite lived tradenames quantitatively.

The significant assumptions used to estimate the fair values of the tradenames tested quantitatively during the fiscal years ended December 28, 2025, December 29, 2024 and December 31, 2023 were as follows:

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Royalty rate(b) 3.0 % 4.0 % 2.5 % 3.0 % 4.0 % 3.6 % 3.0 % 4.0 % 3.6 %

3.0 % 4.0 % 3.6 % 3.0 % 4.0 % 3.6 % 2.5 % 4.0 % 3.5 %

Long-term revenue growth rate (c)

2.0 % 2.5 % 2.3 % 2.0 % 2.5 % 2.3 % 1.0 % 3.0 % 2.0 %

(a) Weighted by the relative fair value of the tradenames that were tested quantitatively.

(b) Represents estimated percentage of sales a market-participant would pay to license the tradenames that were tested quantitatively.

(c) Selected long-term revenue growth rate within 10-year projection period of the tradenames that were tested quantitatively.

A 50 basis point change in any of the significant assumptions used during the fiscal year ended December 29, 2024 or December 31, 2023 would not have resulted in an impairment being recognized when estimating the fair value of our indefinite-lived tradenames.

A 50 basis point change in any of the significant assumptions used during the fiscal year ended December 25, 2022 would not have resulted in an impairment being recognized when estimating the fair value of our indefinite-lived tradenames, with the exception of the fourth quarter indefinite-lived tradename impairments noted above, which were subject to partial impairments of $20.4 million.

Relating to the impaired indefinite-lived tradenames in the fourth quarter of 2022, a 50 basis point change in the discount rate, royalty rate or long-term revenue growth rate at December 25, 2022 would have resulted in an incremental impairment of $2.8 million, $12.2 million and $1.5 million, respectively.

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

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

We filed separate foreign income tax returns.

The income tax expense in our Consolidated Financial Statements has been determined on a stand-alone return basis in accordance with ASC Topic 740, Income Taxes, which requires the recognition of income taxes using the liability method.

The tax provision and current and deferred tax balances have been prepared on a separate-return basis as if we were a separate filer.

Post-Separation, our income tax provisions are calculated based on our operating footprint, as well as our tax return elections and assertions.

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

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

Our foreign income tax returns continue to be filed on a full-year basis.

A reduction in the estimated fair value of our reporting units or any of our tradenames could trigger impairment charges in future periods.

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

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

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

A 25 basis point change in any of the significant assumptions used during the fiscal year ended December 28, 2025, December 29, 2024 or December 31, 2023 would not have resulted in an impairment being recognized when estimating the fair value of our indefinite-lived tradenames.

Our income tax provisions are calculated based on our operating footprint, as well as our tax return elections and assertions.

For all taxable periods, we file a consolidated U.S.

federal income tax return and various state and local income tax returns, and our foreign income tax returns are filed on a full-year basis.

Deferred tax assets and liabilities are determined based on the differences between the financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis