Thomas Mahoney

Thomas Mahoney asked about MasterBrand's comparative strategic position in a future with more tariffs and the potential long-term benefits. He also questioned the drivers of the positive Average Selling Price (ASP) trend in Q1, given negative ASP in late 2024, and asked for clarification on the reasons for the year-over-year inventory growth.

Answer

CEO R. Banyard stated that with 80% of production in the U.S., MasterBrand is better insulated from tariffs than many industries and has the domestic capacity to absorb volume if import models become less viable. He noted that the positive Q1 ASP was partly due to a favorable mix, with the higher end of the market remaining resilient, but also highlighted unexpected softness in lower-priced in-stock products. Regarding inventory, Banyard explained the increase was a combination of some strategic pre-buying and excess safety stock resulting from slower-than-anticipated demand, which he expects to normalize.

Thomas Mahoney of Cleveland Research asked about the typical annual trend for internal inventory, whether the Q3 build was normal, and if recent storms would have any impact on the company's supply chain or product demand.

Answer

CEO Dave Banyard explained that recent years have not been 'normal' for inventory due to supply chain disruptions. He noted that a Q3 inventory build was abnormal but was a strategic move to get ahead of potential port strikes. He stated that recent storms are not expected to have a material impact, as any resulting remodeling demand tends to be spread out over time. CFO Andi Simon added that the year-over-year inventory increase on the balance sheet is largely due to the addition of Supreme's inventory and related purchase accounting.