MasterBrand 2025 Q1 Earnings Misses Targets as Net Income Falls 64.5%

MasterBrand (MBC) reported its fiscal 2025 Q1 earnings on May 07th, 2025. The total revenue of MasterBrand increased by 3.5% to $660.30 million in 2025 Q1, up from $638.10 million in 2024 Q1. Despite the revenue growth, the company's performance fell short of expectations, with a significant drop in earnings per share (EPS) and net income. The guidance for the full year 2025 indicates a low single-digit percentage decrease in net sales year-over-year. MasterBrand's stock has been negatively impacted by the earnings miss and weak guidance, which has led to a decline in its share price.

Revenue
MasterBrand's revenue for the first quarter of 2025 rose to $660.30 million, marking a 3.5% increase from the previous year's figure of $638.10 million. This growth was driven by contributions from different segments, with dealers generating $353.10 million, retailers adding $223.50 million, and builders bringing in $83.70 million.

Earnings/Net Income
MasterBrand's EPS declined 66.7% to $0.10 in 2025 Q1 from $0.30 in 2024 Q1, with net income dropping to $13.30 million, a 64.5% decrease from $37.50 million in the prior year. The decline in EPS and net income signals a challenging quarter for the company.

Post-Earnings Price Action Review
In the past five years, buying MasterBrand shares following a quarter with a revenue drop and holding for 30 days yielded a 9.98% return, underperforming the benchmark by 31.05%. The strategy exhibited a Sharpe ratio of 0.32, indicating a less favorable risk-adjusted return. The maximum drawdown reached -13.63%, while volatility stood at 12.77%, illustrating a challenging risk-return profile for this approach.

CEO Commentary
"End market demand was weaker than anticipated, as a slow start to the Spring selling season negatively impacted our customers servicing the new construction and the repair and remodel markets," said Dave Banyard, President and Chief Executive Officer. Softer demand pressured margins while the company focused on aligning production with the current environment, including executing Supreme integration plans and facility consolidations. Despite near-term margin pressures, Banyard expressed confidence that changes to the manufacturing network, along with cost reductions and targeted investments, will enable competitive full-year adjusted EBITDA margins.

Guidance
For full year 2025, the Company expects a low single-digit percentage decrease in net sales year-over-year, with organic net sales expected to decrease by a mid single-digit percentage and acquisition-related net sales to increase by a mid single-digit percentage. Adjusted EBITDA is projected to be in the range of $315 to $365 million, with an adjusted EBITDA margin of approximately 12.0% to 13.5%. Adjusted diluted earnings per share are anticipated to be between $1.03 and $1.32.

Additional News
Recently, MasterBrand announced its acquisition of Supreme Cabinetry Brands, Inc., which was completed early in the third quarter of fiscal 2024. This strategic move is aimed at enhancing MasterBrand's product offerings and expanding its market presence in North America. Furthermore, the company has been actively engaging in share repurchases, buying back approximately 839 thousand shares of common stock for around $11.4 million during the first quarter of 2025. These actions reflect MasterBrand's commitment to driving shareholder value and strengthening its competitive position in the industry.