Executive Summary

Q2 2025 revenue and EPS exceeded Street: net sales $730.9M (+8% YoY) vs S&P Global consensus $683.3M; Primary EPS $0.40 vs $0.34; EBITDA also beat ($105.4M vs $91.6M). The company maintained full‑year guidance. The quarter was supported by the Supreme acquisition and new construction share gains, offset by R&R softness and fixed cost deleverage . Consensus values from S&P Global.*
Margins improved sequentially but declined YoY: gross margin 32.8% (−130 bps YoY), adjusted EBITDA margin 14.4% (−110 bps YoY); CFO cited lower base‑business volume and fixed cost leverage pressure, partially offset by pricing, CI savings, and Supreme .
Full‑year 2025 outlook reaffirmed (net sales down low‑single digits; adjusted EBITDA $315–$365M; adj. EPS $1.03–$1.32; FCF > net income), while tariff risk is being monitored (potential Section 232 actions) with mitigation via pricing, sourcing, and footprint actions .
Strategic catalyst: definitive all‑stock merger with American Woodmark (5.15x exchange ratio), targeting ~$90M run‑rate cost synergies by year 3, EPS accretion in year 2, and closing in early 2026, positioning the combined entity with broader portfolio, channel diversification, and stronger balance sheet .

What Went Well and What Went Wrong

What Went Well
- Revenue and EPS beat Street; adjusted EBITDA above internal expectations; new construction builder‑direct sales up 5% YoY; acquisition and pricing tailwinds supported top‑line .
- Sequential margin improvement versus Q1; CEO highlighted “strong quarter” with share gains and integration progress: “deliver[ed] second quarter adjusted EBITDA above our expectations” .
- Merger announced with expected ~$90M run‑rate synergies by year three and pro forma net leverage at close below MasterBrand’s 2.0x target; expected EPS accretion in year two .
What Went Wrong
- Base‑business volume decline (R&R weakness) pressured fixed cost leverage and YoY margins (gross −130 bps, adj. EBITDA −110 bps) .
- GAAP diluted EPS declined YoY to $0.29 (from $0.35) and net income margin fell to 5.1% (−160 bps YoY) despite top‑line growth .
- Tariff uncertainty persists (potential reinstatement/expansion of Section 232) with unknown demand impact; management withheld quantification given scope/timing ambiguity .

Financial Results

Metric	Q4 2024	Q1 2025	Q2 2025
Net Sales ($USD Millions)	$667.7	$660.3	$730.9
Gross Margin (%)	30.4%	30.6%	32.8%
Adjusted EBITDA ($USD Millions)	$74.6	$67.1	$105.4
Adjusted EBITDA Margin (%)	11.2%	10.2%	14.4%
Diluted EPS (GAAP) ($)	$0.11	$0.10	$0.29
Adjusted Diluted EPS ($)	$0.21	$0.18	$0.40
Net Income ($USD Millions)	$14.0	$13.3	$37.3
Net Income Margin (%)	2.1%	2.0%	5.1%

Q2 YoY comparison

Metric	Q2 2024	Q2 2025
Net Sales ($USD Millions)	$676.5	$730.9
Diluted EPS (GAAP) ($)	$0.35	$0.29
Adjusted Diluted EPS ($)	$0.45	$0.40
Adjusted EBITDA ($USD Millions)	$105.1	$105.4
Adjusted EBITDA Margin (%)	15.5%	14.4%

Street vs Actual (Q2 2025)

Metric	S&P Global Consensus	Actual	Result
Revenue ($USD Millions)	$683.3M*	$730.9	Bold beat (≈$47.6M)
Primary EPS ($)	$0.34*	$0.40	Bold beat ($0.06)
EBITDA ($USD Millions)	$91.6M*	$105.4	Bold beat (≈$13.8M)

KPIs and Cash

KPI	Q2 2025
Cash and Cash Equivalents	$120.1M
Liquidity Available (Revolver)	$418.6M
Net Debt (Quarter-End)	$878.6M
YTD Cash from Operations	$53.4M
YTD Free Cash Flow	$25.5M
Q2 Share Repurchases	~576k shares; ~$6.7M
YTD Capex	$27.9M

Notes: Primary EPS consensus/actual reflect S&P Global “Primary EPS,” which aligns with company-reported adjusted diluted EPS in this quarter (company GAAP diluted EPS was $0.29) . Consensus values retrieved from S&P Global.*

Guidance Changes

Metric	Period	Previous Guidance (Q1 2025)	Current Guidance (Q2 2025)	Change
Net Sales YoY	FY 2025	Low single‑digit decrease	Low single‑digit decrease	Maintained
Organic Net Sales	FY 2025	Mid single‑digit decrease	Mid single‑digit decrease	Maintained
Acquisition‑related Net Sales	FY 2025	Mid single‑digit increase	Mid single‑digit increase	Maintained
Adjusted EBITDA ($)	FY 2025	$315–$365M	$315–$365M	Maintained
Adjusted EBITDA Margin (%)	FY 2025	~12.0%–13.5%	~12.0%–13.5%	Maintained
Adjusted Diluted EPS ($)	FY 2025	$1.03–$1.32	$1.03–$1.32	Maintained
Free Cash Flow	FY 2025	FCF > Net Income	FCF > Net Income	Maintained
Interest Expense ($)	FY 2025	~$68–$73M	Reiterated ranges (CFO)	Maintained
Effective Tax Rate	FY 2025	~25%	Reiterated ranges (CFO)	Maintained
Capital Expenditures ($)	FY 2025	$75–$85M (updated in Q1)	No update provided in Q2; outlook focus unchanged	—

Earnings Call Themes & Trends

Topic	Q4 2024 (Prior Two)	Q1 2025 (Prior One)	Q2 2025 (Current)	Trend
Tariffs/Macro	Negative price/cost; inflation and slower price realization pressured Q4	Tariffs a minor Q1 impact; potential full‑year exposure low‑single‑digit % of sales; mitigation via pricing/sourcing/footprint	Monitoring potential Section 232 action; demand impact unquantified; preparedness via pricing/suppliers/footprint	Elevated risk; structured mitigation
New Construction vs R&R	R&R choppiness, volume −6% in legacy; mix headwind	Later/weaker spring selling season; margin headwinds in 1H	Builder‑direct +5% YoY; legacy R&R mid‑single‑digit declines; R&R softness to persist 2025	Builders outperform; R&R weak
Pricing/ASP	Negative net ASP and slow realization in Q4	Price improvements flowing through	Pricing aided results; fixed cost deleverage still pressured YoY margins	Gradual improvement
Supreme Integration	Integration proceeding; NC consolidation plan	Synergy ramp expected through year	NC consolidation largely complete; run‑rate production achieved; broader consolidation by next 12–18 months	Execution milestone hit
M&A/Scale	—	—	Announced AWC merger; ~$90M synergies by year 3; accretive in year 2; close early 2026	New catalyst
Leverage/FCF	YE net debt/Adj. EBITDA 2.4x; FCF $211M in 2024	Q1 net debt 2.7x; negative FCF	Q2 net debt $878.6M; leverage 2.5x; target <2x by YE	Improving toward <2x

Management Commentary

CEO: “MasterBrand delivered a strong quarter… adjusted EBITDA above our expectations… encouraged by our momentum and confident in our ability to deliver attractive full‑year adjusted EBITDA margins” .
CEO on merger: “Transformative step… expected… ~$90 million in run‑rate cost synergies by the third year following transaction close” .
CFO: “Gross profit margin… down 130 bps YoY, but improving by 220 bps from the first quarter… decline driven primarily by lower volumes and associated fixed cost leverage… offset by Supreme, CI savings, and higher net ASP” .
CFO on outlook: Reaffirmed adjusted EBITDA $315–$365M, margin 12.0%–13.5%, adjusted EPS $1.03–$1.32; monitoring tariffs; mitigation via price, supplier renegotiation, and sourcing/footprint shifts .

Q&A Highlights

Timing and rationale for merger: Combination fortifies financial profile, expands product/channel coverage; confident on regulatory path; pro forma leverage expected below 2.0x at close .
Synergy phasing: ~$90M run‑rate synergies to phase similarly to Supreme—earlier procurement/SG&A wins, followed by manufacturing network optimization over time .
Supreme synergies and integration: NC consolidation largely complete; run‑rate cabinet production across moved brands; broader consolidation nearing completion over next 12–18 months .
Channel mix/cannibalization: Expect value proposition across channels; expanded dealer network presents cross‑selling opportunities; not embedded in deal model initially .
Demand trajectory: New construction steady in Q2 but expected to soften; R&R “bouncing at the bottom” per AWC; cautious near‑term .

Estimates Context

MasterBrand beat S&P Global consensus on revenue, EPS and EBITDA in Q2 2025; guidance was maintained, implying sell‑side models may need to raise 2H margins modestly (sequential cadence improved in Q2, and integration synergies continue to ramp) while preserving a cautious top‑line in R&R given macro/tariff uncertainties . Consensus values from S&P Global.*

Key Takeaways for Investors

Beat and maintain: Strong top‑line/EPS/EBITDA beat with maintained FY guidance suggests improved execution but ongoing macro/tariff uncertainty; sequential margin recovery is encouraging .
Mix matters: Supreme and builder‑direct strength offset legacy R&R softness; pricing and CI savings continue to buffer fixed cost deleverage .
Integration momentum: Supreme integration hitting key milestones (NC consolidation at run‑rate), supporting 2H margin trajectory .
Strategic catalyst: AWC merger offers ~$90M cost synergies, channel diversification, and capex/automation leverage; expected EPS accretion in year 2 post‑close .
Balance sheet: Liquidity remains ample ($418.6M revolver availability); leverage trending to <2.0x by YE, supporting optionality .
Watchpoints: R&R demand softness, tariff implementation/timing (Section 232), and price‑cost recovery pacing remain key variables to monitor .
Positioning: Near‑term trading skewed to integration/margin prints and merger milestones; medium‑term thesis anchored on synergy delivery, footprint optimization, disciplined pricing, and FCF converting > net income .

Footnote: *Consensus/estimate values retrieved from S&P Global (Capital IQ).

MasterBrand, Inc. (MBC)·Q2 2025 Earnings Summary