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MasterBrand, Inc. (MBC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 net sales were $698.9M, up sequentially and above SPGI consensus; Adjusted diluted EPS of $0.33 missed consensus while adjusted EBITDA margin compressed to 13.0% amid tariffs and volume headwinds. Bolded beats/misses: Revenue beat; EPS miss; EBITDA miss .
  • Guidance updated: net sales now ~flat y/y (raised from prior low-single-digit decline), but adjusted EBITDA narrowed to $315–$335M and adjusted EPS to $1.01–$1.13 (lower midpoint due to tariff timing/impact) .
  • Management highlighted proactive tariff mitigation (pricing surcharges, sourcing shifts, footprint optimization), Supreme integration progress, and readiness for the proposed American Woodmark merger with expected $90M run-rate cost synergies by year 3 post-close (early 2026 targeted) .
  • Near-term stock reaction catalysts: clarity on tariff mitigation pacing (Q4 net unmitigated exposure $20–$25M), quantification of 2026 impacts in February, and merger regulatory timeline; operational catalysts include Las Vegas facility startup and centralized order management rollout supporting service and efficiency .

What Went Well and What Went Wrong

What Went Well

  • Pricing and share gains partially offset market declines; builder/new construction channel outperformed broader starts and completions backdrop .
  • Progress on Supreme integration and systems: “The team is executing the Supreme integration on schedule and within plan… deployment of the centralized order management system… to improve accuracy, efficiency, and visibility” .
  • Strategic combination positioning: “We continue to expect approximately $90 million in run-rate cost synergies by the end of year three post-close” for the proposed American Woodmark merger; shareholder approvals obtained, closing expected early 2026 .

What Went Wrong

  • Gross margin down 190 bps to 31.2% y/y on lower volume/fixed cost absorption and tariffs; adjusted EBITDA margin down 160 bps to 13.0% .
  • Net income margin fell 150 bps y/y to 2.6%; adjusted EPS declined to $0.33 vs $0.40 prior-year period .
  • Free cash flow weaker vs prior year due to lower net income and higher capex tied to integration; Q3 FCF $40M vs $65M last year .

Financial Results

Sequential performance (oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Millions)$660.3 $730.9 $698.9
Gross Profit ($USD Millions)$202.2 $239.7 $218.2
Gross Profit Margin (%)30.6% 32.8% 31.2%
Adjusted EBITDA ($USD Millions)$67.1 $105.4 $90.6
Adjusted EBITDA Margin (%)10.2% 14.4% 13.0%
Diluted EPS (GAAP) ($)$0.10 $0.29 $0.14
Adjusted Diluted EPS ($)$0.18 $0.40 $0.33
Net Income Margin (%)2.0% approx (13.3/660.3) 5.1% approx (37.3/730.9) 2.6%

Q3 2025 vs prior year

MetricQ3 2024Q3 2025YoY Change
Revenue ($USD Millions)$718.1 $698.9 -2.7%
Gross Profit Margin (%)33.1% 31.2% -190 bps
Adjusted EBITDA ($USD Millions)$104.5 $90.6 -13.3%
Adjusted EBITDA Margin (%)14.6% 13.0% -160 bps
Diluted EPS (GAAP) ($)$0.22 $0.14 -36.4%
Adjusted Diluted EPS ($)$0.40 $0.33 -17.5%

Q3 2025 Actual vs SPGI Consensus (earnings press release actuals)

MetricConsensusActualBeat/Miss
Revenue ($USD Millions)$678.6*$698.9 +$20.3M (Beat)
Primary EPS ($)$0.36*$0.33 (Adj. Diluted) -$0.03 (Miss)
EBITDA ($USD Millions)$94.6*$90.6 (Adj.) -$4.0M (Miss)

Values retrieved from S&P Global.*

Non-GAAP adjustments in Q3

  • Adjusted net income was $42.1M vs GAAP net income $18.1M; key adjustments included acquisition-related costs ($15.2M), restructuring charges ($2.6M), restructuring-related ($5.0M), costs related to pending insurance claims ($2.8M), and amortization ($6.4M), net of tax impact (-$8.0M) .

KPIs and Cash/Liquidity

KPIQ3 2025Notes
Net income ($USD Millions)$18.1 Net margin 2.6%
Cash & equivalents ($USD Millions)$114.8 Liquidity on revolver $461.9M
Net debt ($USD Millions)$839.3 Net debt/Adj. EBITDA TTM 2.5x
Free cash flow (39 weeks) ($USD Millions)$65.0 Full-year FCF expected > net income
Tariff exposure (Q4 2025)$20–$25M net unmitigated 232 tariffs effective Oct 14; 50% in Q1’26

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (YoY)FY 2025Low single-digit decline overall; Organic down mid-single digits; Supreme mid-single-digit contribution Approximately flat; Organic down mid-single digits; Supreme mid-single-digit contribution Raised
Adjusted EBITDA ($USD Millions)FY 2025$315–$365; Margin 12–13.5% $315–$335; Margin ~11.5–12.0% Lower midpoint; narrowed
Adjusted Diluted EPS ($)FY 2025$1.03–$1.32 $1.01–$1.13 Lower midpoint; narrowed
Free Cash FlowFY 2025> Net income (maintained) > Net income (maintained) Maintained
Interest expenseFY 2025~$68–$73M Reiterated (no change) Maintained
Effective tax rateFY 2025~25% Reiterated (no change) Maintained
CapexFY 2025$75–$85M (reduced by $10M vs prior) Reiterated (no change) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025)Previous Mentions (Q2 2025)Current Period (Q3 2025)Trend
Tariffs & mitigationSurcharge pricing; early minor impact; planning for broader tariff scenarios Watching reinstatement of 232 tariffs; mitigation via pricing/sourcing/footprint 232 tariffs effective Oct 14; net unmitigated Q4 exposure $20–$25M; 50% rate in Q1’26; multi-pronged mitigation underway Increasing headwind near term; mitigation ramping
Demand by channelR&R down mid-single digits; builder direct up 4% y/y; stock category weak Builder direct +5% y/y; R&R choppy; semi-custom stronger Retail/dealer soft, stock weak; semi-custom stronger; new construction outperformed market Mixed; mid-tier resilience
Operations & footprintNC consolidation; Las Vegas relocation in progress Supreme integration on track; consolidation nearing completion Las Vegas startup completed; centralized order management deployed; continuous improvement savings Execution progress
Tech-enabled initiativesIncremental investment (reduced ~20%); digital demand stimulation Continued funding innovation Advancing cornerstone tech initiatives; infrastructure modernization Building capabilities
Merger strategy (AWI)N/AAnnounced all-stock merger; pro forma leverage <2x; $90M synergies; EPS accretive in year 2 Shareholder approvals obtained; regulatory process underway; close expected early 2026 Advancing toward close
Canada macroDown high-single digits; affordability challenged Continued softness Down mid-single digits; persistent affordability issues Persistent pressure

Management Commentary

  • “We generated net sales of $699 million… decline reflected mid to high single-digit end-market contraction, partially offset by… pricing actions and share gains” — Dave Banyard (CEO) .
  • “Tariffs had a negative impact of nearly 100 basis points to our gross margin… we were able to offset approximately 90%… through mitigation actions” — Andi Simon (CFO) .
  • “We continue to expect approximately $90 million in run-rate cost synergies by the end of year three post-close” (American Woodmark merger) — Dave Banyard (CEO) .
  • “The Las Vegas facility startup was completed this quarter… realignment of our operational footprint to better serve the Western regional market” — Dave Banyard (CEO) .
  • “We are maintaining consistency in our surcharge methodology to provide pricing transparency for our customers” — Dave Banyard (CEO) .

Q&A Highlights

  • Sales guidance revision to ~flat y/y driven by stronger Q3-to-Q4 pace and pricing flow-through; watch demand impact from additional pricing for new tariffs .
  • Pricing realization and demand elasticity: management emphasized non-price mitigation and noted categories like bathroom vanities imported from Mexico may be “not viable at a 50% price increase,” with reassessment likely in 2026 guidance .
  • Tariff phasing: costs start Oct 14 then step up Jan 1; mitigation spans 1–12 months; expect lag through several quarters .
  • Unmitigated tariff exposure: $20–$25M in Q4 based on current mix and outlook; detailed 2026 assessment to come with FY results in February .

Estimates Context

  • Q3 2025 results vs SPGI consensus: Revenue beat (actual $698.9M vs $678.6M*), while adjusted EPS missed (actual $0.33 vs $0.36*) and adjusted EBITDA missed (actual $90.6M vs $94.6M*). Management attributed margin pressure to lower volume/fixed cost absorption and tariffs, with offset from pricing and continuous improvement savings .
  • Next quarters’ consensus points reflect near-term tariff drag and seasonality: Q4 2025 EPS $0.14*, Revenue $607.6M*; Q1 2026 EPS $0.12*, Revenue $614.1M* (limited estimate coverage) — monitoring revision risk as tariff mitigation progresses. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Revenue resilience with share gains and pricing offsets suggests top-line durability, but margins remain sensitive to volume and tariff timing; expect gradual mitigation benefits into 2026 .
  • Adjusted EBITDA/ EPS guidance narrowed lower due to tariffs; watch Q4 net unmitigated tariff hit ($20–$25M) and the February update quantifying 2026 impacts — potential estimate reset catalyst .
  • Operational execution (Las Vegas startup, centralized OMS) and continuous improvement are tangible levers to restore margin once demand stabilizes; track sequential margin cadence in Q4–H1’26 .
  • Supreme integration is yielding cost savings; merger with American Woodmark adds a second structural synergy stack ($90M run-rate by year 3) with pro forma leverage ~2x at close — medium-term rerating potential post-close .
  • Product mix matters: semi-custom mid-tier is outperforming as consumers trade down; stock category weakness at retail persists — monitor channel mix shifts for margin implications .
  • Pricing strategy (surcharge methodology) and non-price mitigation (supplier renegotiations, alternative sourcing, footprint optimization) are critical to offset 232 tariffs; demand elasticity risk remains in certain categories (e.g., imported vanities) .
  • Balance sheet/liquidity solid (cash $114.8M, revolver availability $461.9M; net debt/TTM adj. EBITDA 2.5x), supporting integration and merger execution while maintaining FCF > net income in 2025 .

Additional supporting documents:

  • Q3 2025 earnings release and 8-K (financials and guidance): .
  • Q3 2025 earnings call transcript (operations, tariffs, merger updates, Q&A): .
  • Prior quarters for trend analysis: Q2 2025 call (merger announcement, financials): ; Q1 2025 call (pricing, footprint actions): .
  • Other Q3-period press releases (brand/product/trends): .