MasterBrand Reports Third Quarter 2023 Financial Results

MasterBrand, Inc. (NYSE: MBC, the “Company,” or “MasterBrand”), the largest residential cabinet manufacturer in North America, today announced third quarter 2023 financial results.

• Net sales decreased 21.1% year-over-year to $677.3 million
• Net income increased 14.4% year-over-year to $59.7 million
• Adjusted EBITDA¹ margin increased 153 basis points year-over-year to 16.2%
• Operating cash flow for the thirty-nine weeks ended September 24, 2023 was $336.5 million with free cash flow¹ of $315.1 million
• Increases 2023 financial outlook

“We are pleased to report another solid quarter of financial performance. Demand was once again in line with our expectations, and our strategic initiatives continued to deliver adjusted EBITDA performance in advance of our estimates,” said Dave Banyard, President and Chief Executive Officer. “Our associates’ disciplined use of The MasterBrand Way, the cornerstone of our culture, has produced outsized margin performance this year, and is positioning us for growth in the future. We believe our culture and investments in strategic initiatives will allow us to outperform the market in the long term.”

Third Quarter 2023

Net sales were $677.3 million, compared to $858.4 million in the third quarter of 2022, primarily due to lower volumes, driven by softer end market demand. Gross profit was $237.5 million, compared to $264.9 million in the comparable period of the prior year. Gross profit margin increased 421 basis points to 35.1%, as the impact of volume declines were more than offset by lower material and freight costs, productivity, restructuring and restructuring-related savings, and discrete items in the quarter.

Net income was $59.7 million, compared to $52.2 million in the third quarter of 2022, primarily due to higher operating income, and lower income taxes, which were partially offset by higher interest expense of $15.3 million in the third quarter of 2023, related to bank debt issued in December 2022 at the time of our separation from Fortune Brands Home and Security. Diluted earnings per common share was $0.46, compared to pro forma diluted earnings per common share¹ of $0.41 in the comparable period of the prior year.

Adjusted EBITDA¹ was $109.8 million, compared to $126.0 million in the third quarter of 2022. Adjusted EBITDA¹ margin increased 153 basis points to 16.2%, compared to 14.7% in the comparable period of the prior year.

Balance Sheet, Cash Flow and Share Repurchases

As of September 24, 2023, the Company had $122.5 million in cash and $480.2 million of availability under its revolving credit facility. Net debt¹ was $585.0 million and net debt to adjusted EBITDA¹ was 1.5 x.

Operating cash flow was $336.5 million for the thirty-nine weeks ended September 24, 2023, compared to $117.9 million in the prior year period. Free cash flow¹ was $315.1 million for the thirty-nine weeks ended September 24, 2023, compared to $85.7 million in the same period of the prior year.

During the third quarter of 2023, the Company repurchased approximately 943 thousand shares of common stock for $11.5 million under the Company’s stock repurchase program.

2023 Financial Outlook

The Company expects:

• Net sales year-over-year decline of mid teens percentage in the fourth quarter of 2023
• Adjusted EBITDA^1,2 in the range of $370 million to $380 million, with related adjusted EBITDA margins^1,2 of roughly 13.5 to 14.0 percent for the full year 2023

The Company is increasing the midpoint of its full-year adjusted EBITDA¹ outlook by $20 million based on stronger than expected performance in the third quarter of 2023. This outlook includes the remaining insurance proceeds received related to the Company’s claim in the second quarter for damages resulting from the impact of a tornado at its Jackson, Georgia production facility. Net sales outlook remains unchanged for the remainder of the year as the Company continues to expect softer end market demand in 2023.

“Given our financial performance in the third quarter and continued operational excellence, we are raising our adjusted EBITDA¹ and related margin outlook for the full year 2023,” said Andi Simon, Executive Vice President and Chief Financial Officer. “We are extremely pleased with the savings generated by our strategic initiatives to date, and we believe further investments can yield incremental savings in future periods.”

For the complete press release, click here.

About MasterBrand

MasterBrand, Inc. (NYSE: MBC) is the largest manufacturer of residential cabinets in North America and offers a comprehensive portfolio of leading residential cabinetry products for the kitchen, bathroom and other parts of the home. MasterBrand products are available in a wide variety of designs, finishes and styles and span the most attractive categories of the cabinets market: stock, semi-custom and premium cabinetry. These products are delivered through an industry-leading distribution network of over 4,500 dealers, major retailers and builders. MasterBrand employs over 13,600 associates across more than 20 manufacturing facilities and offices. Additional information can be found at www.masterbrand.com.

Source: Masterbrand, Inc.