Summary of MBC Q1 2026 Earnings Call

1Key Financial Results and Metrics

Net Sales: $618 million, a 6.4% decrease from $660.3 million in Q1 2025.

Adjusted EBITDA: $28 million, down from $67 million year-over-year; adjusted EBITDA margin at 4.5%.

Gross Profit: $156.6 million, with a gross profit margin of 25.3%, down 530 basis points year-over-year.

Net Loss: $15.4 million compared to a net income of $13.3 million in Q1 2025; net income margin at -2.5%.

Free Cash Flow: Outflow of $146 million, compared to a $41 million outflow in the prior year.

Net Debt: $946.5 million, with a leverage ratio of 3.7 times adjusted EBITDA.

2Strategic Updates and Business Highlights

Successfully executed a $30 million cost reduction initiative, with benefits expected to phase in throughout 2026.

Continued tariff mitigation efforts exceeded expectations, with gross tariff costs around $25 million for the quarter.

Ongoing integration planning for the pending merger with American Woodmark, with expected annual run-rate cost synergies of $90 million by year three post-close.

Focus on continuous improvement initiatives to enhance operational efficiency and manage cost pressures.

3Forward Guidance and Outlook

Second Quarter 2026: Anticipated net sales to be down mid- to high-single digits year-over-year, with expectations for sequential improvement from Q1.

Adjusted EBITDA for Q2 projected between $51 million and $61 million, with an adjusted diluted earnings per share range of $0.03 to $0.13.

Full-year 2026 outlook remains cautious, expecting continued demand softness across both new construction and repair/remodel markets, with anticipated free cash flow to exceed net income.

4Bad News, Challenges, or Points of Concern

Persistent demand softness due to affordability concerns, elevated interest rates, and cautious consumer sentiment.

Declining metrics in both new construction and repair/remodel markets, with consumer sentiment at 40-year lows.

Weather-related disruptions led to unplanned production downtime, negatively impacting fixed cost absorption.

Competitive pressures in the market, with consumers gravitating towards lower-priced options, impacting product mix and margins.

5Notable Q&A Insights

Management indicated that while the market remains challenging, they have not observed significant changes in consumer behavior recently.

Pricing actions are ongoing, but the impact of rising fuel costs is being monitored closely, with some adjustments already made.

There is a competitive landscape where companies are cautious about pricing strategies, with some potentially underpricing to gain market share.

Incremental margins are expected to improve in the second half of the year, but the focus remains on year-over-year comparisons rather than sequential improvements. Overall, MasterBrand, Inc. is navigating a challenging environment with strategic cost management and operational improvements while preparing for a potential market recovery in the future.