MasterBrand (MBC) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales rose 6% year-over-year to $718.1 million, driven by the Supreme Cabinetry Brands acquisition, while organic sales declined due to softer repair and remodel demand and lower average selling prices.

• Net income for Q3 2024 was $29.1 million, down 51.3% year-over-year, impacted by acquisition-related costs, margin pressure, restructuring, higher SG&A, and increased interest and amortization.

• Adjusted EBITDA was $104.5 million with a margin of 14.6%, down 160 basis points year-over-year due to inflation, strategic investments, and non-recurring prior-year benefits.

• Free cash flow for Q3 was $65 million, totaling $142.3 million year-to-date, lower than last year due to the prior year’s inventory release.

• Integration of Supreme is progressing well, with operational and commercial synergies beginning to materialize.

Financial highlights

• Net sales increased 6% year-over-year to $718.1 million, with Supreme contributing 9% growth and legacy business down 3%.

• Gross profit was $238 million (33.1% margin), down from 35.1% last year due to lower ASP, product mix, inflation, and absence of prior-year discrete items.

• Net income was $29.1 million, down 51.3% year-over-year; adjusted diluted EPS was $0.40, down from $0.49.

• Operating income for Q3 2024 was $57.6 million, down 37.5% year-over-year.

• Net debt at quarter end was $953.9 million, with a net debt to adjusted EBITDA ratio of 2.5x.

Outlook and guidance

• Full-year 2024 net sales expected to increase low single digits year-over-year, with adjusted EBITDA guidance of $385–$405 million and margins of 14–14.5%.

• Adjusted diluted EPS expected in the range of $1.50–$1.62, with Supreme accretive to results.

• Capital expenditures guidance raised to $80–$85 million, including $9 million for integration; free cash flow expected to exceed net income.

• No change to anticipated interest expense ($73–$76 million) or tax rate (24–25%).

• Organic net sales performance anticipated to align with underlying market demand as new products and channel offerings gain traction.