mbc-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended March 31, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-41545

MasterBrand, Inc.

(Exact name of registrant as specified in its charter)


Delaware			88-3479920
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

3300 Enterprise Parkway, Suite 300 Beachwood, Ohio			44122
(Address of principal executive offices)			(Zip Code)

877-622-4782

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Common Stock, par value $0.01 per share	MBC	New York Stock Exchange
(Title of each class)	(Trading Symbol)	(Name of each exchange on which registered)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The registrant had outstanding 127,003,405 shares of common stock as of May 3, 2024.


			Page No
Part I - Financial Information			1
Item 1. Financial Statements (Unaudited)			1
Condensed Consolidated Statements of Income			1
Condensed Consolidated Statements of Comprehensive Income			2
Condensed Consolidated Balance Sheets			3
Condensed Consolidated Statements of Cash Flows			4
Condensed Consolidated Statements of Equity			5
Notes To Unaudited Condensed Consolidated Financial Statements			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			20
Item 3. Quantitative and Qualitative Disclosures About Market Risk			25
Item 4. Controls and Procedures			26
Part II - Other Information			27
Item 1. Legal Proceedings			27
Item 1A. Risk Factors			27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			28
Item 3. Defaults Upon Senior Securities			28
Item 4. Mine Safety Disclosures			28
Item 5. Other Information			28
Item 6. Exhibits			29
Signatures			30


	13 Weeks Ended
(U.S. Dollars presented in millions, except per share amounts)		March 31, 2024		March 26, 2023
NET SALES		$	638.1	$	676.7
Cost of products sold		433.4		472.1
GROSS PROFIT		204.7		204.6
Selling, general and administrative expenses		137.8		135.3
Amortization of intangible assets		3.7		4.0

Restructuring charges (adjustments)		0.4		(0.4)
OPERATING INCOME		62.8		65.7

Interest expense		14.1		17.4
Other (income) expense, net		(0.3)		0.4
INCOME BEFORE TAXES		49.0		47.9
Income tax expense		11.5		12.9
NET INCOME		$	37.5	$	35.0
Average Number of Shares of Common Stock Outstanding
Basic		127.0		128.2
Diluted		130.5		129.5
Earnings Per Common Share
Basic		$	0.30	$	0.27
Diluted		$	0.29	$	0.27


	13 Weeks Ended
(U.S. Dollars presented in millions)		March 31, 2024		March 26, 2023
NET INCOME		$	37.5	$	35.0
Other comprehensive income (loss), before tax:
Foreign currency translation adjustments		(1.1)		(0.2)
Unrealized gains on derivatives:
Unrealized holding gains arising during period		1.8		2.6
Less: reclassification adjustment for gains included in net income		(0.5)		(2.4)
Unrealized gains on derivatives		1.3		0.2



Other comprehensive income, before tax		0.2		—
Income tax expense related to items of other comprehensive income		—		—
Other comprehensive income, net of tax		0.2		—
COMPREHENSIVE INCOME		$	37.7	$	35.0


(U.S. Dollars presented in millions)	March 31, 2024		December 31, 2023
ASSETS
Current assets
Cash and cash equivalents	$	153.7	$	148.7
Accounts receivable, net	224.4		203.0
Inventories	247.9		249.8
Other current assets	76.5		75.7
TOTAL CURRENT ASSETS	702.5		677.2
Property, plant and equipment, net of accumulated depreciation	353.3		356.6
Operating lease right-of-use assets, net of accumulated amortization	59.9		60.1
Goodwill	924.3		925.1
Other intangible assets, net of accumulated amortization	330.9		335.5
Other assets	29.2		27.2
TOTAL ASSETS	$	2,400.1	$	2,381.7
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	163.6	$	151.4
Current portion of long-term debt	26.9		17.6
Current operating lease liabilities	16.3		16.1
Other current liabilities	133.6		164.3
TOTAL CURRENT LIABILITIES	340.4		349.4
Long-term debt	681.1		690.2
Deferred income taxes	81.9		83.6
Pension and other postretirement plan liabilities	8.3		7.9
Operating lease liabilities	45.8		46.3
Other non-current liabilities	13.6		10.5
TOTAL LIABILITIES	1,171.1		1,187.9
Contingencies and Accrued Losses (Note 13)
Equity
Common stock (par value $0.01 per share; authorized 750.0 million shares; 129.9 million issued and 127.2 million outstanding as of March 31, 2024; 129.1 million issued and 126.8 million outstanding as of December 31, 2023)	1.3		1.3
Paid-in capital	22.1		17.8
Treasury stock, at cost	(32.9)		(26.1)
Accumulated other comprehensive loss	(3.5)		(3.7)
Retained earnings	1,242.0		1,204.5
TOTAL EQUITY	1,229.0		1,193.8
TOTAL LIABILITIES AND EQUITY	$	2,400.1	$	2,381.7


	Common Stock			Paid-in Capital		Treasury stock, at cost		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Total Equity
(U.S. Dollars and shares presented in millions)	Shares	Amount
Balance at December 25, 2022	128.0	$	1.3	$	—	$	(0.1)	$	(14.5)	$	1,022.5	$	1,009.2
Comprehensive income:
Net income	—	—		—		—		—		35.0		35.0
Other comprehensive income	—	—		—		—		—		—		—
Stock-based compensation	0.5	—		4.9		(2.7)		—		—		2.2

Balance at March 26, 2023	128.5	$	1.3	$	4.9	$	(2.8)	$	(14.5)	$	1,057.5	$	1,046.4

Balance at December 31, 2023	126.8	$	1.3	$	17.8	$	(26.1)	$	(3.7)	$	1,204.5	$	1,193.8
Comprehensive income:
Net income	—	—		—		—		—		37.5		37.5
Other comprehensive income	—	—		—		—		0.2		—		0.2
Stock-based compensation	0.5	—		4.3		(4.9)		—		—		(0.6)
Stock repurchase program	(0.1)	—		—		(1.9)		—		—		(1.9)
Balance at March 31, 2024	127.2	$	1.3	$	22.1	$	(32.9)	$	(3.5)	$	1,242.0	$	1,229.0


	13 Weeks Ended
(U.S. Dollars presented in millions)		March 31, 2024		March 26, 2023
Net Sales by Channel(a)
Dealers(b)		$	315.0	$	346.8
Retailers(c)		242.9		258.5
Builders (d)		80.2		71.4
Net sales		$	638.1	$	676.7
Net Sales by Shipping Location
United States		$	608.2	$	643.4
Canada		25.2		30.2
Mexico		4.7		3.1
Net sales		$	638.1	$	676.7


(U.S. Dollars presented in millions)	March 31, 2024		December 31, 2023
Inventories:
Raw materials and supplies	$	164.8	$	175.1
Work in process	24.6		25.1
Finished products	58.5		49.6
Total inventories	$	247.9	$	249.8
Property, plant and equipment:
Land and improvements	$	31.9	$	31.8
Buildings and improvements to leaseholds	309.7		304.0
Machinery and equipment	558.0		551.9
Construction in progress	32.2		36.6
Property, plant and equipment, gross	931.8		924.3
Less: accumulated depreciation	578.5		567.7
Property, plant and equipment, net of accumulated depreciation	$	353.3	$	356.6




Other current liabilities:
Accrued salaries, wages and other compensation	$	34.4	$	67.6
Accrued restructuring	0.6		1.4
Accrued income and other taxes	22.0		18.5
Accrued product warranties	11.6		12.9
Other accrued expenses	65.0		63.9
Total other current liabilities	$	133.6	$	164.3


(U.S. Dollars presented in millions)	Total Goodwill
Balance at December 31, 2023	$	925.1
Q1 2024 translation adjustments	(0.8)
Balance at March 31, 2024	$	924.3


(U.S. Dollars presented in millions)	Location	March 31, 2024		December 31, 2023
Assets:
Foreign exchange contracts	Other current assets	$	3.9	$	3.0
	Total assets	$	3.9	$	3.0
Liabilities:
Foreign exchange contracts	Other current liabilities	$	0.1	$	0.1
	Total liabilities	$	0.1	$	0.1


	Amount Recognized in Statement of Comprehensive Income for Cash Flow Hedging Relationships
	13 Weeks Ended
(U.S. Dollars presented in millions)	March 31, 2024		March 26, 2023
Foreign exchange contracts:
Unrealized holding gains arising during period	$	1.8	$	2.6
Less: reclassification adjustment for gains included in net income	(0.5)		(2.4)
Unrealized gains on derivatives	$	1.3	$	0.2


	March 31, 2024						December 31, 2023
(U.S. Dollars presented in millions)	Gross Carrying Amounts		Accumulated Amortization		Net Book Value		Gross Carrying Amounts		Accumulated Amortization		Net Book Value
Indefinite-lived tradenames	$	183.3	$	—	$	183.3	$	184.2	$	—	$	184.2
Amortizable intangible assets
Tradenames	10.3		(10.3)		—		10.4		(10.4)		—
Customer and contractual relationships	363.0		(215.4)		147.6		363.6		(212.3)		151.3
Patents/proprietary technology	11.0		(11.0)		—		11.0		(11.0)		—
Total	384.3		(236.7)		147.6		385.0		(233.7)		151.3
Total identifiable intangibles	$	567.6	$	(236.7)	$	330.9	$	569.2	$	(233.7)	$	335.5


	Amount of Gain (Loss) Recognized in Earnings on Fair Value Hedging Relationships
	13 Weeks Ended
(U.S. Dollars presented in millions)	March 31, 2024		March 26, 2023
Foreign exchange contracts:
Hedged items	$	0.1	$	1.1
Derivatives designated as hedging instruments	—		(2.5)
Net gains (losses) recognized in earnings	$	0.1	$	(1.4)


	Fair Value
(U.S. Dollars presented in millions)	March 31, 2024		December 31, 2023
Assets:
Derivative asset financial instruments (Level 2)	$	3.9	$	3.0
Deferred compensation program assets (Level 2)	8.9		5.5
Total assets	$	12.8	$	8.5
Liabilities:
Derivative liability financial instruments (Level 2)	$	0.1	$	0.1


(U.S. Dollars presented in millions)	Balance at December 31, 2023		Provision		Cash Expenditures(a)		Balance at March 31, 2024
Workforce reduction costs	$	1.3	$	0.1	$	(0.9)	$	0.5
Other	0.1		0.3		(0.3)		0.1
	$	1.4	$	0.4	$	(1.2)	$	0.6


	Pension Benefits				Postretirement Benefits
	13 Weeks Ended				13 Weeks Ended
(U.S. Dollars presented in millions)	March 31, 2024		March 26, 2023		March 31, 2024		March 26, 2023
Service cost	$	—	$	—	$	0.1	$	0.1
Interest cost	1.3		1.6		0.1		0.1
Expected return on plan assets	(1.0)		(1.8)		—		—
Net periodic cost (benefit)	$	0.3	$	(0.2)	$	0.2	$	0.2


(U.S. Dollars presented in millions)	Foreign Currency Adjustments		Derivative Hedging Gain (Loss)		Pension and Other Postretirement Plans Adjustments		Accumulated Other Comprehensive (Loss) Income
Balance at December 31, 2023	$	4.1	$	2.2	$	(10.0)	$	(3.7)
Amounts classified into accumulated other comprehensive (loss) income	(1.1)		1.8		—		0.7
Amounts reclassified into earnings	—		(0.5)		—		(0.5)
Net current period other comprehensive (loss) income	(1.1)		1.3		—		0.2
Balance at March 31, 2024	$	3.0	$	3.5	$	(10.0)	$	(3.5)

Balance at December 25, 2022	$	(8.0)	$	2.8	$	(9.3)	$	(14.5)
Amounts classified into accumulated other comprehensive (loss) income	(0.2)		2.6		—		2.4
Amounts reclassified into earnings	—		(2.4)		—		(2.4)
Net current period other comprehensive (loss) income	(0.2)