MasterBrand (MBC) Bank of America Securities 2024 Leveraged Finance Conference summary

Company overview and strategy

• Formed through decades of acquisitions, now the largest U.S. conventional cabinet manufacturer with a broad product portfolio across all price points and styles.

• Serves over 6,000 customers, including retailers and builders, with 20,000 employees and 20 North American manufacturing facilities plus a large facility in Mexico.

• Recent focus has shifted from internal operational alignment and efficiency to targeted growth in profitable product categories and channels.

• Growth strategy includes selective market share gains, letting go of less profitable segments, and expanding in under-indexed regions and products.

• Emphasis on disciplined pricing, product commonization, and leveraging operational improvements for flexibility and profitability.

Market environment and demand trends

• Business mix is about one-third new construction and two-thirds repair and remodel (R&R), with channels split among builders, dealers, and retail.

• New construction volumes are up mid-single digits year-on-year, while R&R is down low single digits, resulting in flat overall volume.

• Significant pent-up demand exists for R&R due to aging U.S. housing stock and consumer dissatisfaction with existing kitchens.

• High credit card debt, elevated prices, and election-related uncertainty are delaying big-ticket R&R purchases.

• Recovery in R&R is expected when interest rates stabilize and consumer confidence returns, but timing remains uncertain.

Pricing, trade-down, and channel dynamics

• Trade-down behavior began mid-2023, impacting net sales by 3% in Q3 and 5% in Q4, then stabilizing.

• Recent pricing headwinds are more from price concessions than trade-downs, managed through disciplined promotions rather than permanent list price reductions.

• Home centers represent over 30% of sales; pricing is managed through a quarterly, index-based process, improving partnership and focus on desired share.

• Strategic focus is on winning profitable share in home centers and leveraging product breadth to meet diverse customer needs.