MasterBrand, Inc.

Good afternoon and welcome to MasterBrand's second quarter 2026 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.

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 Andy Simon, Executive Vice President and Chief Financial Officer. We issued a press release earlier this afternoon disclosing our second quarter 2026 financial results. This document is available on the investor section of our website at masterbrand.com. I'd like to remind you that this call will include forward-looking statements and either our prepared remarks or the associated question and answer session. These forward-looking statements are based on current expectations and market outlets. They 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 issued 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 2025 Form 10-K. An update is necessary in our subsequent 2026 Form 10-Qs. which are available 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. They're 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 second quarter 2026 financial results from Andy, along with our second half 2026 financial outline. 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. The second quarter marked an important milestone for MasterBrand. On May 28th, we completed our merger with American Woodmark. bringing together two industry leaders to create the most comprehensive portfolio of trusted cabinet brands in North America. I want to start by welcoming our new associates from American Woodmark and thanking our teams for staying focused on executing and delivering for our customers through the close. This is our first earnings call as a combined company, and the commitment we have seen across the organization in these first weeks has only strengthened our conviction in what this combination can deliver. Today I'll cover our second quarter results, the state of our end markets and the combined company's path forward. Now turning to the quarter. We generated net sales of $815 million in the quarter, which includes $126 million of American Woodmark net sales from the close date. Legacy Master Brand net sales were $690 million in line with our guidance range, following a mid to high single digit year over year market decline, slightly offset by favorable net average selling price due to the flow through of tariff pricing. Adjusted EBITDA for the quarter was $63 million, including $4 million of partial period contribution from American Woodmark, and adjusted EBITDA margin was 7.7%. Legacy Master Brand adjusted EBITDA was $58 million, and adjusted EBITDA margin was 8.4%. The lower margin was primarily due to market-driven volume declines and the related unfavorable fixed cost leverage, unfavorable product mix, and material, labor, and freight inflation, partially offset by the flow-through of tariff mitigation, our continuous improvement efforts, and previously announced cost action. For the quarter, free cash flow was $129 million compared to $67 million in the same period last year, primarily reflecting improved working capital. This quarter, we are introducing second half of 2026 outlook for the combined company. Now that the merger is complete and integration planning is converted to execution, we have better visibility into the combined business than earlier this year. and have grown more confident in our ability to navigate the dynamic trade environment. The introduction of the second half guide reflects our improved line of sight and confidence in the actions and plans underway. It's not a change in our view of the market. Andy will walk you through the details shortly. Let me now briefly review our end markets in the quarter. During the second quarter, as anticipated, the broader single-family new construction market softened further, down mid to high single digits. driven by ongoing pressures on completions and persistent affordability challenges. With inflation picking back up, the higher for longer outlook on interest rates continues to weigh on both builders and buyers. Builder confidence remains near its weakest level since the housing crisis era, and more than 60% of builders are offering sales incentives. Against that backdrop, our new construction business declined at low single digits, excluding the impact of partial period American Woodmark sales in the quarter. continuing to outperform the broader market. Shifting to the repair and remodel market served by our dealer and retail customers, we saw continued softness in demand consistent with recent quarters as end markets remained impacted by affordability pressure, low existing home turnover, and historically weak consumer sentiment. Consumers continued to defer large discretionary projects, and the trade downtrend we've been seeing persisted as consumers opted for value products and paired back features in made-to-order categories. a key driver of this quarter's mixed pressure. Excluding the partial period contribution from American Woodmark, our repair and remodel business declined mid to high single digits in line with the broader market and our expectations. Layered on top of these market dynamics, the ongoing conflict in the Middle East continues to introduce added consumer uncertainty and broader market volatility that remain difficult to size at this stage, including rising fuel costs that are adding further pressure to an already cautious consumer. Taking together, our view of the 2026 addressable market down mid-single digits is directionally unchanged from our previous view, and our outlook assumes no improvement in demand conditions this year, with the broader market expected to begin its recovery in 2027. Now turning to the merger and why we're so excited about the combined company. As we said at the announcement, this combination brings together two customer-centric platforms with highly complementary strengths, strong, broad portfolios of trusted cabin brands, and StreamBlind low-cost manufacturing profiles. Both are long-established American companies with the vast majority of manufacturing operations based in the United States, a differentiator we believe matters more than ever in today's trade environment. We believe this combination will ultimately enable us to drive growth and improve margins beyond what either company could achieve on its own. New construction and the home centers have been the two most resilient segments of the market through this downturn, and we believe they hold significant potential when the eventual recovery comes. Together, Masterbrand and American Woodmark can build the most efficient, cost-effective model for serving these large channels. In new construction, the combination gives us the geographic reach with an industry-leading model to better meet the customer where they are, whether direct or through distribution. The combination also strengthens our position in key new construction markets and enhances our product portfolio. We plan to apply the same disciplined approach to the combined business that has helped Legacy Masterbrand outperform the new construction market and we're confident in our ability to earn back the share American Woodmark has seeded in this channel prior to the merger. In the home centers, the added scale across our combined network enables better inventory management, more product options, and an operating footprint that is well positioned to bring the high service levels our partners expect. In the dealer channel, the clearest opportunity is cross-selling American Woodmark's products in the master brand's much larger dealer population. allowing us to meet customers and consumers at every price point with the best value, quality, and design. Realizing the full sales potential of this channel will take more time given current market conditions. It also requires thoughtfully organizing a combined product portfolio and brand package, including meaningful brand and price point light space for a highly fragmented market. We expect this work will simplify our offering for the channel over time. Across new construction, home centers, and dealer, These cross-sell and white space opportunities were not built into our original deal model, and we view them as upside to the transaction economics. Stepping back, the strategic logic of this combination comes down to two factors, scale and flexibility. Our scale reduces inefficiencies and duplication and extends service across a broader geographic footprint. The flexible operating model that we have championed over the past six years creates a simple, connected product continuum that consumers can choose from with ease. Because we are investing in a much larger platform, our investments make an outsized impact, including increased investment in next-generation automation, product innovation, and enhanced in-person and digital engagement, all aimed at greater efficiency and a better customer experience. Turning to integration and cost synergies. Integration is off to a strong start. We've aligned our senior leadership structure, and we're now organizing the next layers of the business. where processes overlap, we're adopting the best of what each company has built. Where they differ, we're implementing the strongest approach along with the systems that come with it. Additionally, across the two companies, we have overlapping capabilities and products as well as excess capacity in our manufacturing network. We intend to apply the same manufacturing network optimization and disciplined integration track record we've built over time to capture greater efficiency. We're already realizing early procurement and overhead synergies We've initiated two plant closures to begin consolidating our production footprint. We've also begun the process of cross-selling our product portfolios into the dealer network. As of the end of July, we've executed approximately $30 million of annualized cost synergies, and we expect roughly $15 million of savings in the second half of 2026. With corporate overhead and procurement, the primary sources executed to date. In total, we now expect over $100 million of annual run rate cost synergies by the end of year three post-close, exceeding our original synergy target. We continue to expect the transaction to be accreted to adjusted diluted earnings per share in year two post-close. Importantly, the stated $100 million plus annual run rate synergy target excludes both the $30 million of legacy master brand cost actions we announced last quarter and American Woodmark's previously announced closure of its Monterey, Mexico facility, which has already completed its wind down. Both of those programs are incremental savings on top of the synergy target. Now turning to capital allocation. For the second half of 2026, we expect capital expenditures of $71 million, or 3% of net sales, including integration capital. We are prioritizing high-return projects, and by eliminating planned spending in overlapping areas of the network, we estimate $4 million of CapEx synergies in the second half of 2026 alone. Beyond CapEx, our priorities are clear. The near-term focus is the balance sheet. We're currently targeting a net leverage ratio below two times by the end of 2028. As synergies build and the integration process progresses, we expect our financial flexibility will grow. We anticipate that achieving our target leverage range will open the door to resuming share repurchases and opportunistic M&A. The path is straightforward, and we have a clear line of sight to executing against it. Before I turn it over to Andy, I want to step back and talk about the earnings potential of this combined business because it follows the same principle, focusing on what we can control. After an initial assessment, we believe there's a path to structurally higher profitability for the combined business, independent of the market recovery, meaning any improvement in demand would be upside to that path. There are four levers that drive it. First, and our top priority, is cost discipline. The last three years have taught us we can't count on a market recovery. So we're removing that variable from the equation. Across SG&A and our manufacturing footprint, it is clear that both companies carried excess costs from operating independently through a prolonged downturn and the merger closing process. We're aligning that cost base to a level appropriate for a combined company of our scale, and that work is already underway. Second, resetting our product portfolio and the supply chain behind it. Consecutive years of inflation and market decline forced fast pricing and portfolio decisions at both companies, and not all of them are optimized for where the market has landed. Similarly, the need to rapidly mitigate tariffs required us to make quick supply chain decisions that prioritize speed over optimization. Legacy Masterbrand already carried the industry's most comprehensive product portfolio, and the combination with American Woodmark presents a natural opportunity to rebalance the portfolio of the combined company while maintaining complete coverage and a range of choices across the full price spectrum. In parallel, we're implementing the master brand way to optimize our sourcing and manufacturing configuration to ensure the combined business operates as efficiently as possible without sacrificing key service metrics. We have a strong track record here. Over the past five and a half years, we've closed 11 plants while consolidating production into our remaining network, all the while preserving capacity and service level. And we intend to bring that same discipline to the combined footprint. Third, leveraging the portfolio to support a healthier product mix across end markets and drive profitable growth. This opportunity is particularly meaningful in new construction, where we believe our breadth of products and price points, combined with our deep relationships and service expertise, enables the combined company to serve builders better and more efficiently. And finally, we're investing behind dealer share gains. We believe the continued investment in technology, quality, and service across the combined dealer network will position us to grow with our dealer partners even in a flat market. and we expect that to meaningfully advance that path. Despite persistent, challenging market conditions, the completion of this merger marks the start of a new chapter for MasterBrand, a combined platform with a clear path to growth, tangible synergy targets and strong early momentum on integration. I'm pleased to announce that we will host an investor day in the first quarter of 2027, where we plan to size each of these levers and lay out the time-bound plan behind. We will also introduce the full combined company story including our strategy and refresh long-term financial targets. This is a company we are proud to be building and we look forward to seeing many of you there. With that, I'll turn it over to Andy for a detailed review of our financial results and outlook.