MasterBrand Reports 3.5% Net Sales Increase to $660.3 Million in Q1 Fiscal 2025

MasterBrand, Inc. reported its financial results for the first quarter of fiscal 2025, revealing a net sales increase of 3.5% to $660.3 million, compared to $638.1 million in the same period last year. The growth was bolstered by $60.8 million in sales from the recently acquired Supreme Cabinetry Brands, which offset a decline in sales unit volume. Excluding the Supreme acquisition, net sales would have decreased by approximately $38.6 million, primarily due to weaker demand in the repair and remodel and single-family new construction markets. The company’s net income fell significantly to $13.3 million, down 64.5% from $37.5 million in the prior year, reflecting increased costs and lower sales volume.

The cost of products sold rose by 5.7% to $458.1 million, driven by the inclusion of Supreme's costs, which added $39.4 million. The gross profit margin decreased slightly to 30.6%, down from 32.1% a year earlier, as the company faced higher manufacturing costs and unfavorable fixed cost leverage. Selling, general, and administrative expenses also increased by 11.8% to $154.0 million, largely due to the Supreme acquisition and increased associate-related costs. The operating income dropped to $37.1 million, a decline of 40.9% compared to the previous year.

In terms of operational metrics, MasterBrand's average number of shares outstanding increased slightly to 127.5 million from 127.0 million a year ago. The company reported a significant rise in interest expense, which reached $19.4 million, up from $14.1 million, attributed to a higher outstanding debt balance following the refinancing transaction related to the Supreme acquisition. The effective income tax rate for the quarter was 23.1%, a slight decrease from 23.5% in the prior year, influenced by lower foreign income taxed at higher rates.

Strategically, MasterBrand's acquisition of Supreme on July 10, 2024, for $520 million in cash, has expanded its portfolio in the premium cabinetry market. The acquisition is expected to enhance the company's distribution capabilities and broaden its customer reach through complementary dealer networks. The company incurred $1.6 million in acquisition-related costs during the quarter, which were recorded in selling, general, and administrative expenses. Looking ahead, MasterBrand anticipates that the integration of Supreme will yield operational efficiencies and contribute positively to its financial performance, although it acknowledges the challenges posed by current market conditions and demand fluctuations.