MBC · MasterBrand, Inc.

MasterBrand's first quarter 2026 results reflect a challenging demand environment and cost headwinds. Net sales declined 6.4% year-over-year to $618.0 million, driven by a mid-single-digit market decline and slower housing completions. Gross profit fell 22.6% to $156.6 million, with gross margin contracting 530 basis points to 25.3% due to lower volume, unfavorable fixed cost leverage, unfavorable product mix, inflation, and tariffs. The company reported a net loss of $15.4 million compared to net income of $13.3 million in the prior year, as lower gross profit and higher deal-related SG&A expenses (including costs for the pending American Woodmark merger) outweighed initial benefits from cost actions. Adjusted EBITDA dropped 58.3% to $28.0 million, with margin down 570 basis points to 4.5%. Management highlighted that continuous improvement initiatives and tariff mitigation actions partially offset the headwinds. Gross tariff costs were approximately $25 million in the quarter, and the company expects to offset 100% of tariff costs on a run-rate basis by end of 2026. For the second quarter, MasterBrand guided net sales down mid- to high-single-digit, adjusted EBITDA of $51-$61 million (margin 7.8%-8.8%), and adjusted diluted EPS of $0.03-$0.13. The guidance reflects typical seasonal volume uplift, modest mix improvement, and benefit from pricing and cost actions. The pending merger with American Woodmark is expected to close in Q2 2026, with $90 million annual run-rate cost synergies anticipated by year three. The company's balance sheet showed $138.4 million cash, $1,084.9 million total debt, and net debt to adjusted EBITDA of 3.7x. Free cash flow was negative $146.2 million, driven by lower net income and working capital movements. No share repurchases were made due to merger restrictions.