0001941365-25-000080
SEC filingMasterBrand's Q2 2025 net sales rose 8% to $730.9M on Supreme acquisition, but operating income declined 13.5% due to lower volume and higher restructuring.
For the thirteen weeks ended June 29, 2025, MasterBrand reported net sales of $730.9 million, an 8.0% increase from $676.5 million in the prior year quarter. The growth was primarily driven by the Supreme acquisition, which contributed $70.7 million in incremental sales. Excluding Supreme, organic sales declined $16.3 million due to weaker repair/remodel and new construction end-market demand, with lower unit volume of $35.0 million partly offset by favorable price/mix of $18.9 million. Gross profit rose 3.8% to $239.7 million, but gross margin contracted to 32.8% from 34.1% as cost of products sold increased 10.3%, including $47.0 million from Supreme. Organic cost of products sold decreased $1.3 million, driven by lower volume ($21.9 million) but offset by higher manufacturing costs and unfavorable fixed cost leverage ($20.6 million). Selling, general and administrative expenses increased 8.7% to $159.4 million, largely due to Supreme ($13.2 million) and partially offset by lower acquisition-related costs ($2.5 million). Restructuring charges more than doubled to $6.6 million, primarily for severance related to workforce alignment. Operating income fell 13.5% to $67.3 million. Net income was $37.3 million, down 17.7% from $45.3 million, reflecting higher operating costs and restructuring. Interest expense declined 8.3% to $18.9 million, as the prior year included $6.5 million in nonrecurring refinancing costs.
For the twenty-six weeks ended June 29, 2025, net sales increased 5.8% to $1,391.2 million from $1,314.6 million, with Supreme contributing $131.5 million. Organic sales declined $54.9 million, driven by volume down $83.1 million and price/mix up $29.5 million. Gross margin fell to 68.2% cost ratio (100% - gross margin) from 66.9%, reflecting similar cost pressures. Operating income dropped 25.7% to $104.4 million, and net income declined 38.9% to $50.6 million. Operating cash flow decreased to $53.4 million from $96.1 million, impacted by lower net income and increased working capital.
MasterBrand reports net sales through three channels: dealers, retailers, and builders. In Q2 2025, dealer sales—serving builders, trades, and remodelers—rose 16.2% to $411 million, driven by Supreme and favorable price/mix, though organic volume declined. Retailer sales fell 3.8% to $220 million, reflecting weak same-store traffic and lower consumer spending. Builder direct sales increased 6.3% to $98 million, supported by new construction projects despite market headwinds. The mix shift toward higher-margin dealer sales helped offset some margin pressure.
Management's outlook is cautious, citing continued weakness in repair/remodel and single-family new construction markets. The company announced a definitive agreement to combine with American Woodmark in an all-stock transaction expected to close in early 2026, pending shareholder and regulatory approvals. No financial guidance was provided for future periods. The company expects to continue cost reduction actions and leverage its scale and distribution advantages. The Pillar Two tax rules may impact the effective tax rate in 2026. Overall, near-term performance hinges on end-market recovery and successful integration of Supreme and the planned merger.
As of June 29, 2025, MasterBrand held $120.1M in cash and cash equivalents, down slightly from $120.6M at year-end 2024. Total debt stood at $998.7M (net of unamortized issuance costs), comprising $700.0M of 7.00% Senior Notes due 2032 and $310.0M drawn on the $750.0M revolving credit facility (maturity June 2029). Net debt was approximately $878.6M. The company had $418.6M of revolver availability. Shareholders' equity increased to $1,361.0M from $1,294.7M, driven by net income and other comprehensive income, partially offset by share repurchases.
No material purchase commitments were disclosed in the Notes. The company has customary operating lease liabilities ($76.2M total, of which $19.3M current) and a product warranty liability of $7.9M. Contingencies include a Mexican tax assessment where the company believes additional loss is remote. The defined benefit pension plan was terminated in February 2025, with a $5.2M surplus recorded in other current assets.
During the first half of 2025, MasterBrand repurchased 1,415,429 shares for $18.1M (average $12.82 per share) under its $50.0M authorization (March 2025), leaving $47.4M available. No dividends were paid. Capital expenditures totaled $27.9M (2.0% of sales), with an additional $3.7M unpaid. Debt decreased by $9.1M as the company made net revolver repayments. The company refinanced its credit facility in 2024, extending maturities.
MasterBrand operates as a single reportable segment: residential cabinetry. In Q2 2025, net sales were $730.9M (up 8.0% YoY), and net income was $37.3M. The CODM uses net income for performance evaluation. Geographic mix: U.S. $700.0M (95.8%), Canada $27.9M (3.8%), Mexico $3.0M (0.4%). Sales channels: Dealers $410.0M (56.1%), Retailers $223.0M (30.5%), Builders $97.9M (13.4%). The Supreme acquisition, closed July 2024, contributed $70.7M in Q2 2025 sales.