MasterBrand,the largest residential cabinet manufacturer in North America, has released its financial results for the third quarter of 2024. We are pleased with our third-quarter performance, which aligns with our expectations despite challenges in our end markets,” said Dave Banyard, President and CEO. “Our team delivered outstanding results, achieving key business goals while making significant progress with the integration of our Supreme acquisition. The combination of our complementary products, dealer network, and operations is coming together as planned.
“As we approach the end of 2024, we remain focused on positioning the Company for growth in any market environment and driving superior returns for our shareholders,” Banyard added.
Third Quarter 2024 Highlights
- Net Sales: $718.1 million, up 6% from the previous year, with a 9% growth from the Supreme acquisition. This was partially offset by a 3% decline in average selling prices (ASP). Volume and foreign exchange had no impact on year-over-year results.
- Gross Profit: $238.0 million, compared to $237.5 million in Q3 2023. Gross margin dropped by 200 basis points to 33.1%, impacted by lower ASP, higher personnel and freight costs, and a one-time benefit last year from medical insurance rebates and insurance proceeds from tornado damage. This was partially offset by cost savings from strategic initiatives and favorable variable compensation.
- Net Income: $29.1 million, a 51.3% decline from $59.7 million in Q3 2023, primarily due to acquisition-related costs, lower gross profit margin, restructuring charges, and higher interest expense, partially offset by favorable variable compensation and a positive contribution from Supreme. Net income margin was 4.1%, down from 8.8% last year.
- Adjusted EBITDA: $104.5 million, compared to $109.8 million in Q3 2023, with a margin decrease of 160 basis points to 14.6%, reflecting the lower gross profit margin.
- Diluted EPS: $0.22, compared to $0.46 in Q3 2023. Adjusted diluted EPS was $0.40, down from $0.49 last year.
Balance Sheet, Cash Flow, and Capital Allocation
As of September 29, 2024, MasterBrand had $108.4 million in cash and $350.4 million available under its revolving credit facility. Total debt stood at $1,062.3 million, with a debt-to-net income ratio of 7.2x.
Operating cash flow for the thirty-nine weeks ending September 29, 2024, was $176.9 million, compared to $336.5 million in the prior year, largely due to a strategic inventory release in 2023. Free cash flow for the same period was $142.3 million, compared to $315.1 million in 2023.
MasterBrand repurchased approximately 371,000 shares for $6.5 million during the first nine months of 2024. No share repurchases occurred in Q3 2024.
2024 Financial Outlook
For the full year 2024, the Company maintains its previous expectations:
- Net Sales: Low single-digit percentage increase year-over-year, with organic decline offset by mid-single-digit percentage growth from acquisitions.
- Adjusted EBITDA: Between $385 million and $405 million, with an adjusted EBITDA margin of around 14.0% to 14.5%.
- Adjusted Diluted EPS: In the range of $1.50 to $1.62.
MasterBrand expects organic net sales to align with market demand, with new products, channel-specific offerings, and price adjustments helping to drive growth.
“We are encouraged by our continued operational excellence and the success of our Supreme acquisition, which contributed to year-over-year sales growth despite softer end-market conditions,” said Andi Simon, Executive Vice President and CFO. “We anticipate demand trends in the R&R and new construction markets to remain mixed, but our outlook for 2024 remains positive, with growth in both sales and profitability.”
Conference Call Details
MasterBrand will host a live conference call and webcast at 4:30 p.m. ET on November 5, 2024, to discuss its financial results and outlook. The live call can be accessed by dialing (877) 407-4019 (U.S.) or (201) 689-8337 (international), with a webcast available on the “Investors” section of the MasterBrand website. A replay of the call will be available through November 19, 2024, by dialing 877-660-6853 (U.S.) or 201-612-7415 (international), using the passcode 13749429.
Non-GAAP Financial Measures
In this release, the Company uses certain non-GAAP financial measures, such as EBITDA, adjusted EBITDA, free cash flow, and adjusted diluted EPS, which provide additional insight into MasterBrand’s operational performance. These measures should be considered alongside GAAP measures, as they reflect the Company’s core business operations and are used in decision-making.
For a detailed reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures, please refer to the financial statements section of this release.
