MasterBrand, Inc.

Good afternoon and welcome to Masterbrand's third quarter 2025 earnings conference call. During the company's prepared remarks, all participants will be in a listen-only mode. Following management's closing remarks, callers are invited to participate in a question and answer session. Please note that this conference call is being recorded. I would now like to turn the call over to Henry Harrison, Senior Director of Corporate Financial Planning and Analysis. Please go ahead.

Thank you and good afternoon. We appreciate you joining us for today's call. With me on the call today are Dave Banyard, President and Chief Executive Officer of MasterBrand, and Annie Simon, Executive Vice President and Chief Financial Officer. We issued a press release earlier this afternoon disclosing our third quarter 2025 financial results. This document is available on the investor section of our website at masterbrand.com. I would like to remind you that this call will include forward-looking statements in either our prepared remarks or the associated question and answer sessions. These forward-looking statements are based on current expectations and market outlook and are subject to certain risks and uncertainties that may cause actual results to differ materially from those currently anticipated. Additional information regarding these factors appears in the section entitled Forward-looking Statements in the press release we issue today. More information about risks can be found in our filings with the Securities and Exchange Commission, including under the heading Risk Factors in our full year 2024 Form 10. and K, and our subsequent 2025 Form 10Qs, which will be available once filed at sec.gov and at masterbrand.com. The forward-looking statements in this call speak only as of today, and the company does not undertake any obligation to update or revise any of these statements, except as required by law. Today's discussion includes certain non-GAAP financial measures. please refer to the reconciliation tables, which are in the press release issued earlier this afternoon and are also available at SEC.gov and at MasterBrand.com. Our prepared remarks today will include a business update from Dave, followed by a discussion of our third quarter 2025 financial results from Andy, along with our 2025 financial outlook. Finally, Dave will make some closing remarks before we host a question and answer session. With that, let me turn the call over to Dave.

Thank you and good afternoon, everyone. We appreciate you joining us for today's call. Our third quarter results reflect disciplined execution in a persistently challenging demand environment and proactive management of evolving trade dynamics. Amid these conditions, our team made significant progress on our integration initiatives and has continued to deliver for our customers while strengthening MasterBrand's foundation for both near-term stability and long-term growth. In the third quarter, we generated net sales of $699 million, a 3% decrease compared to the same period last year, consistent with our expectations. The decline reflected mid- to high-single-digit end-market contraction, partially offset by the continued flow-through of previously implemented pricing actions and share gains in our distributor and builder channels. Demand across our retail and dealer channels remained soft. particularly in stock cabinetry, while semi-custom offerings performed relatively better as consumers with discretionary income continued to seek value within the mid-range of the portfolio. We delivered adjusted EBITDA of $91 million compared to $105 million in the third quarter of last year, representing an adjusted EBITDA margin of 13%, a 160 basis point decline year over year due to lower volume and related fixed cost absorption, as well as tariffs, partially offset by continuous improvement efforts net of inflation, continued net average selling price improvements, and Supreme synergies. While margin was slightly below expectations, we view this as a solid performance in a difficult operating environment. Pre-cash flow for the quarter was $40 million compared to $65 million in the same period last year, driven by lower net cash provided by operating activities and higher capital expenditures related to the integration of Supreme. We continue to expect free cash flow for the full year to exceed net income consistent with our long-term objectives of balancing investment and growth with strong cash conversion. Turning to our end markets. While conditions remain challenged, they were generally consistent with our expectations. In new construction, single family housing starts were down mid to high single digits as affordability and buyer confidence remained constrained. Despite this backdrop, our new construction sales outperformed the broader market, reflecting the strength of our broad product portfolio and consistent service execution, underpinned by superior cycle time reliability, effective supply chain coordination, and proactive design and specification support, all of which customers consistently cite as key differentiators. Looking at the remainder of the year, we continue to expect overall new construction and market demand to be down mid-single digits on a full-year basis. However, through our strong builder relationships, reliable service performance, and focused execution, we are positioned to continue to outperform the broader market. In the repair and remodel market, serviced by our dealer and retail customers, demand remained choppy as elevated total project costs, low existing home turnover, and low consumer sentiment continued to weigh on large discretionary projects. Our repair and model business was down mid to high single digits year over year, which was aligned with the broader market and our expectations. The impact was most evident in entry-price stock cabinetry and digital retail channels, where softer project demand weighed on volume. In contrast, mid-tier semi-custom products delivered stronger performance, benefiting from consumers trading down from premium offerings and placing greater emphasis on value amid the broader macro backdrop. This emphasizes the strength of our multi-tier product portfolio. We continue to expect the repair and remodel market to be down mid to high single digits for the full year, as consumers delay larger home renovation projects amid ongoing affordability pressures. Turning to Canada, our third quarter performance was down mid single digits, consistent with the market and in line with our expectations. Housing affordability remains a persistent challenge. with elevated prices and limited resale inventory continuing to constrain buyer activity. We continue to expect full year Canadian end market demand to be down mid single digits year over year. We anticipate the market more broadly to be down mid to high single digits for the full year 2025. As we look further ahead, we currently expect demand across both new construction and repair and remodel to remain subdued through next year. with gradual improvement anticipated in late fiscal 2026 or early fiscal 2027. However, we recognize that trade and market conditions could rapidly change, potentially shifting our outlook. In the meantime, our focus remains on servicing our customers, aligning production with demand, and controlling costs, positioning the business for growth when the market does return. Turning to the current trade environment, The tariff landscape has evolved meaningfully since our last call and remains a major area of focus for us. As many of you know, the Section 232 lumber tariffs took effect on October 14, and we are diligently evaluating the implications of the 25% tariff and impending 50% tariff on kitchen cabinets, bathroom vanities, and related products. This said, we've been contingency planning for several months in anticipation of these potential changes. Our teams across sourcing, manufacturing, and pricing are executing a coordinated mitigation strategy as we refine our assessment and work with the administration to understand certain specifics of the Section 232 lumber tariffs. While these tariffs will introduce incremental costs, we believe MasterBrand is well positioned to navigate them effectively. As discussed last quarter, we've taken steps to enhance our sourcing flexibility and are actively engaging suppliers to minimize exposure. We are working through various manufacturing footprint and operational adjustments to mitigate the impact of tariffs and best serve our customers in growth regions. Finally, we are maintaining consistency in our surcharge methodology to provide pricing transparency for our customers as the landscape continues to evolve. While we remain confident in our mitigation plans, we continue to monitor potential indirect impacts on consumer demand and housing affordability, which are inherently more difficult to quantify. Importantly, The master brand way, our structured, data-driven operating system enables us to adapt quickly through rapid problem solving and execution across our network. That said, with Section 232 tariffs already in effect and set to double in the first quarter of 2026, we do anticipate some phasing challenges in the fourth quarter of 2025 and into full year 2026 as we work to fully implement our mitigation initiatives. Andy will outline several key considerations to help frame the potential impact of these tariffs on our business later in the call. Operationally, we continue to execute well, despite the challenging demand environment. Our teams made significant progress in the third quarter on supreme integration execution, our potential merger with American Woodmark is progressing as expected, and our continuous improvement and strategic deployment initiatives remain effective. The team is executing the supreme integration on schedule and within plan, clear demonstration of the organizational capability and rigor embedded in the master brand way. These efforts are driving the cost efficiencies we expected, despite market and volume-related headwinds. Additionally, we expect revenue synergies from the Supreme integration to begin coming through at the market returns, which, as a reminder, were excluded from our disclosed synergy targets. Building on our continued success with Supreme, We're now focusing our resources on supporting the potential combination with American Woodmark, applying the same disciplined playbook that has proven effective. We are pleased with the progress on the pending merger. Integration planning is well underway, and we're prepared to begin executing immediately following close. We continue to expect approximately $90 million in run rate cost synergies by the end of year three post-close, driven by procurement, overhead, and manufacturing network efficiencies. Importantly, on October 30th, both Masterbrand and American Woodmark shareholders independently voted to provide the necessary shareholder approvals for the proposed transaction. We are also progressing through the regulatory process and continue to expect that the transaction will close in early 2026. Together, MasterBrand and American Woodmark would enhance the industry's most comprehensive portfolio of trusted cabinetry brands, products, and services, and the combined company is expected to unlock and deliver meaningful value for our customers, associates, and shareholders, as well as to the end consumer, reinforcing our confidence in the long-term potential of this merger. Finally, turning to our continuous improvement efforts and capital allocation priorities. Across our facilities, continuous improvement programs began exceeded plan, driving measurable savings that partially offset volume-related headwinds. These programs remain an essential part of our ability to manage through near-term softness while positioning us for long-term margin expansion. Our technology investments are intentional, aligned with MasterBrand's strategic priorities, and designed to build scalable, resilient systems that support long-term growth. This quarter, we advanced several cornerstone initiatives, including the deployment of the centralized order management system, which are designed to improve accuracy, efficiency, and visibility across the network while simplifying core processes. In parallel, we are executing a phased infrastructure modernization and risk mitigation program across our facilities to enhance network, server, and factory system durability, ultimately ensuring greater protection and long-term support for the core operations. Additionally, the Las Vegas facility startup was completed this quarter and marks a significant realignment of our operational footprint to better serve the western regional market. Together, these investments are delivering measurable gains in productivity, precision, and agility while positioning our organization for accelerated innovation and growth. From a capital allocation perspective, we remain focused on operational execution and flexibility. Capital expenditures were aligned with our expectations. Additionally, our balance sheet remains healthy with sufficient liquidity to support growth initiatives, integration activities, and shareholder returns. In closing, we executed with discipline, continued to advance the supreme integration, and are planning for the proposed merger with American Woodmark and further strengthen our operations and balance sheet. While near-term challenges persist, our long-term strategy is intact and our confidence in the business remains strong. As the housing market stabilizes, we are well positioned to capitalize on recovery with greater efficiency, scale, and flexibility than ever before. With that, I'll turn the call over to Andy for a detailed review of our financial results and outlook.