mbc-20240929

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 September 29, 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 every Interactive Data File required to be submitted 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.

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 127,103,438 shares of common stock as of November 1, 2024.

Table of Contents


			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			25
Item 3. Quantitative and Qualitative Disclosures About Market Risk			34
Item 4. Controls and Procedures			35
Part II - Other Information			36
Item 1. Legal Proceedings			36
Item 1A. Risk Factors			36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36
Item 3. Defaults Upon Senior Securities			36
Item 4. Mine Safety Disclosures			37
Item 5. Other Information			37
Item 6. Exhibits			38
Signatures			39

Table of Contents

Part I - FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS (Unaudited)

MasterBrand, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	13 Weeks Ended				39 Weeks Ended
(U.S. Dollars presented in millions, except per share amounts)	September 29, 2024		September 24, 2023		September 29, 2024		September 24, 2023
NET SALES	$	718.1	$	677.3	$	2,032.7	$	2,049.1
Cost of products sold	480.1		439.8		1,359.0		1,370.8
GROSS PROFIT	238.0		237.5		673.7		678.3
Selling, general and administrative expenses	166.3		140.3		450.8		417.3
Amortization of intangible assets	6.3		3.6		13.7		11.6

Restructuring charges	7.8		1.4		11.0		4.1
OPERATING INCOME	57.6		92.2		198.2		245.3

Interest expense	20.0		15.3		54.7		49.9
Other income, net	(1.8)		(1.0)		(5.0)		(0.1)
INCOME BEFORE TAXES	39.4		77.9		148.5		195.5
Income tax expense	10.3		18.2		36.6		49.6
NET INCOME	$	29.1	$	59.7	$	111.9	$	145.9
Average Number of Shares of Common Stock Outstanding
Basic	127.1		127.6		127.0		128.1
Diluted	130.8		130.3		130.8		129.9
Earnings Per Common Share
Basic	$	0.23	$	0.47	$	0.88	$	1.14
Diluted	$	0.22	$	0.46	$	0.86	$	1.12

See notes to unaudited condensed consolidated financial statements

Table of Contents

MasterBrand, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	13 Weeks Ended				39 Weeks Ended
(U.S. Dollars presented in millions)	September 29, 2024		September 24, 2023		September 29, 2024		September 24, 2023
NET INCOME	$	29.1	$	59.7	$	111.9	$	145.9
Other comprehensive (loss) income, before tax:
Foreign currency translation adjustments	(4.0)		(2.0)		(15.8)		7.6
Unrealized (losses) gains on derivatives:
Unrealized holding (losses) gains arising during period	(4.1)		1.6		(8.0)		8.1
Less: reclassification adjustment for losses (gains) included in net income	2.0		(3.1)		0.7		(8.6)
Unrealized losses on derivatives	(2.1)		(1.5)		(7.3)		(0.5)



Other comprehensive (loss) income, before tax	(6.1)		(3.5)		(23.1)		7.1
Income tax expense related to items of other comprehensive income	—		—		—		—
Other comprehensive (loss) income, net of tax	(6.1)		(3.5)		(23.1)		7.1
COMPREHENSIVE INCOME	$	23.0	$	56.2	$	88.8	$	153.0

See notes to unaudited condensed consolidated financial statements

Table of Contents

MasterBrand, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(U.S. Dollars presented in millions)	September 29, 2024		December 31, 2023
ASSETS
Current assets
Cash and cash equivalents	$	108.4	$	148.7
Accounts receivable, net	216.1		203.0
Inventories	299.4		249.8
Other current assets	63.0		75.7
TOTAL CURRENT ASSETS	686.9		677.2
Property, plant and equipment, net of accumulated depreciation	456.7		356.6
Operating lease right-of-use assets, net of accumulated amortization	71.3		60.1
Goodwill	1,129.4		925.1
Other intangible assets, net of accumulated amortization	577.9		335.5
Other assets	38.0		27.2
TOTAL ASSETS	$	2,960.2	$	2,381.7
LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	175.3	$	151.4
Current portion of long-term debt	—		17.6
Current operating lease liabilities	16.8		16.1
Other current liabilities	186.3		164.3
TOTAL CURRENT LIABILITIES	378.4		349.4
Long-term debt	1,062.3		690.2
Deferred income taxes	154.0		83.6
Pension and other postretirement plan liabilities	7.5		7.9
Operating lease liabilities	56.7		46.3
Other non-current liabilities	13.7		10.5
TOTAL LIABILITIES	1,672.6		1,187.9
Contingencies and Accrued Losses (Note 14)
Equity
Common stock (par value $0.01 per share; authorized 750.0 million shares; 130.1 million issued and 127.1 million outstanding as of September 29, 2024; 129.1 million issued and 126.8 million outstanding as of December 31, 2023)	1.3		1.3
Paid-in capital	34.6		17.8
Treasury stock, at cost	(37.9)		(26.1)
Accumulated other comprehensive loss	(26.8)		(3.7)
Retained earnings	1,316.4		1,204.5
TOTAL EQUITY	1,287.6		1,193.8
TOTAL LIABILITIES AND EQUITY	$	2,960.2	$	2,381.7

See notes to unaudited condensed consolidated financial statements

Table of Contents

MasterBrand, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	39 Weeks Ended
(U.S. Dollars presented in millions)	September 29, 2024		September 24, 2023
OPERATING ACTIVITIES
Net income	$	111.9	$	145.9
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	39.5		34.9
Amortization of intangibles	13.7		11.6
Restructuring charges, net of cash payments	4.3		(13.9)
Write-off and amortization of finance fees	8.2		1.7
Stock-based compensation	16.8		13.2


Changes in operating assets and liabilities:
Accounts receivable	(2.3)		60.1
Inventories	(32.5)		103.9
Other current assets	(1.8)		6.9
Accounts payable	18.0		(42.8)
Accrued expenses and other current liabilities	(3.5)		9.2
Other items	4.6		5.8
NET CASH PROVIDED BY OPERATING ACTIVITIES	176.9		336.5
INVESTING ACTIVITIES
Capital expenditures(a)	(34.6)		(21.4)
Proceeds from the disposition of assets	8.4		0.3
Acquisition of business, net of cash acquired	(515.7)		—
NET CASH USED IN INVESTING ACTIVITIES	(541.9)		(21.1)
FINANCING ACTIVITIES
Proceeds from revolving credit facility borrowings	430.0		55.0
Issuance of Senior Notes	700.0		—
Repayment of revolving credit facility borrowings	(55.0)		(290.0)

Repayment of term loan	(712.5)		(37.5)