MasterBrand (NYSE:MBC) reported fourth-quarter and full-year 2025 results that management said were shaped by ongoing demand pressure across housing-related end markets and a “complex trade backdrop,” including Section 232 tariffs that took effect in October 2025. Executives said the company remained focused on supporting customers, advancing integration work, and preserving liquidity through targeted cash management while preparing for the pending acquisition of American Woodmark.
Fourth-quarter results pressured by late-quarter new construction slowdown
For the fourth quarter, MasterBrand posted net sales of $644.6 million, down 3.5% from $667.7 million a year earlier. CEO Dave Banyard said performance reflected a mid-single-digit market decline, partially offset by the continued flow-through of prior pricing actions, including tariff-related adjustments.
MasterBrand recorded a net loss of $42.0 million versus net income of $14.0 million in the prior-year quarter. Diluted loss per share was $0.33, while adjusted loss per share was $0.02 compared with adjusted EPS of $0.22 a year earlier.
Gross profit declined to $167.5 million from $203.3 million, and gross margin fell 440 basis points to 26.0%. Simon said the margin decline was driven by volume/mix and unfavorable fixed cost leverage, tariffs net of mitigation actions, and restructuring-related expenses, partially offset by pricing, continuous improvement savings, and Supreme integration synergies. She said tariffs reduced gross margin by nearly 300 basis points in the quarter, with about one-third of that impact offset through mitigation actions.
SG&A rose to $186.9 million from $152.3 million, primarily due to a $17 million one-time bad debt provision tied to a specific customer, inflation and personnel costs, acquisition- and restructuring-related costs, depreciation, and investments in digital, technology, and marketing. Interest expense declined to $17.6 million from $19.3 million as the company paid down debt.
Free cash flow in the quarter was $53 million, down from $69 million a year earlier. Management said lower profitability and deal-related expenses weighed on cash generation, though the company emphasized preserving liquidity and reiterated its expectation that full-year free cash flow will exceed net income on an annual basis.
Full-year 2025: sales up with Supreme contribution, margins lower
For full-year 2025, net sales were $2.7 billion, up 1% versus 2024, driven by the contribution from Supreme and net average selling price improvements, despite a mid-single-digit market decline, according to management. Simon said Supreme contributed approximately 5% to full-year net sales.
Gross profit was $827.6 million, down 5.6% year over year, and gross margin declined 220 basis points to 30.3%. Simon said the full-year margin decline reflected lower unit volumes and unfavorable fixed-cost leverage, inflation, and tariffs, partially offset by pricing and the full-year inclusion of Supreme and related synergies. She said tariffs reduced full-year gross margin by about 115 basis points, with more than half of the impact offset through mitigation actions.
Adjusted EBITDA was $298.2 million, down 18% from $363.6 million, and adjusted EBITDA margin fell to 10.9% from 13.5%. Diluted EPS was $0.21 versus $0.96 in 2024, while adjusted diluted EPS was $0.91 compared with $1.40.
On the balance sheet, MasterBrand ended the year with $183.3 million of cash and $441.9 million of liquidity available under its revolving credit facility. Net debt was $791.2 million, and the net debt-to-adjusted EBITDA leverage ratio was 2.7x. Free cash flow for 2025 was $117.5 million, down from $211.1 million in 2024, reflecting lower net income. Capital expenditures totaled $78.2 million, primarily tied to Supreme integration, Simon said.
End markets: continued contraction and trade-down behavior
Management said 2025 marked the third consecutive year of market contraction, with elevated interest rates, affordability constraints, and lower consumer confidence affecting both new construction and repair-and-remodel (R&R). Banyard said U.S. single-family new construction declined high single digits in the fourth quarter and mid-single digits for the full year, with the fourth quarter slowdown sharper than expected. He added that MasterBrand’s new construction sales again outperformed the broader market, citing exposure to production builders, portfolio breadth, and service reliability.
In R&R, Banyard described demand as uneven in the quarter and said the U.S. cabinet R&R market declined mid-single digits in both the quarter and the full year, constrained by low existing-home turnover. He said the company continued to see trade-down behavior, with stock customers shifting toward opening price point offerings and premium-tier demand migrating toward semi-custom and value semi-custom options.
In Canada, Banyard said the market declined mid-single digits in the quarter and for the full year, with both new construction and R&R down mid-single digits.
Tariffs and mitigation: costs elevated, timing remains key issue
Executives spent significant time discussing trade policy changes and the company’s mitigation plans. Banyard said Section 232 tariffs introduced “meaningful additional duties” across materials and imports and noted that while the planned Jan. 1, 2026 tariff rate increase was deferred, a 25% tariff on cabinets, vanities, and related products remains in place through 2026, with a 50% tariff scheduled for Jan. 1, 2027 absent further changes.
Simon added that countervailing duties on hardwood and decorative plywood went into effect on Jan. 12, while anti-dumping duties were anticipated to be fully implemented later in the month. She said MasterBrand’s outlook includes tariffs currently in effect and anticipated anti-dumping plywood duties, but does not reflect other proposed or future trade policy changes.
The company outlined mitigation actions including pricing adjustments, supplier renegotiations, alternative sourcing, manufacturing optimization, product component design changes to reduce tariff exposure, and a surcharge methodology to provide transparency for customers. Simon said mitigation efforts can take one to 12 months to fully materialize and noted some actions were being sequenced or deferred ahead of the anticipated American Woodmark merger to avoid making standalone changes that could be disadvantageous post-close.
Outlook: quarterly guidance, planned cost reductions, and 1Q expectations
Citing volatility in trade actions and reduced visibility into costs and demand, Simon said MasterBrand will transition to providing quarterly guidance “until longer-term visibility improves.” For the first quarter of 2026, the company expects end markets to be down mid to high single digits year over year and expects net sales to be down mid to high single digits versus the prior year period.
For the first quarter, MasterBrand guided to adjusted EBITDA of $23 million to $33 million (adjusted EBITDA margin of 3.9% to 5.3%) and adjusted diluted loss per share of $0.06 to $0.00. Simon said the outlook reflects lower expected volumes and fixed cost absorption, the timing of tariff mitigation and cost actions, and the typical seasonal step-down from the fourth quarter to the first.
To align costs with demand, management said it is implementing $30 million of planned cost reductions in 2026, with savings beginning in the first quarter and full realization by year-end. In the Q&A, Banyard clarified that $30 million represents the dollar amount of savings expected in 2026 (with annualized savings higher), and that the actions are “broad-based” and mainly structural.
On tariffs, Simon estimated unmitigated gross tariff exposure of roughly 5% to 6% of 2026 net sales based on current sourcing and product mix and trade policies currently in effect, including anticipated plywood duties. She said more than 85% of the full-year net negative tariff impact is expected in the first half of 2026, while the company expects to fully offset 100% of tariff dollar costs on a run-rate basis by the end of 2026 through mitigation initiatives.
Management reiterated that the outlook does not include any financial benefits from the pending American Woodmark merger, nor transaction or integration costs. Banyard said the company anticipates closing the transaction early in the year, subject to remaining customary regulatory approvals, and continues to expect approximately $90 million in run-rate cost synergies by the end of year three post-close.
Looking further out, Banyard said the company expects 2026 to remain a year of muted demand, with end markets declining roughly mid-single digits, but expects conditions to stabilize and modestly improve in 2027, supported by easier comparisons, improving affordability, easing financing conditions, and a gradual normalization in housing turnover.
About MasterBrand (NYSE:MBC)
MasterBrand Inc is one of the largest manufacturers of cabinetry and home storage solutions in North America. The company specializes in designing, producing and distributing kitchen and bath cabinetry for both new construction and the remodeling markets. Its offerings span a broad spectrum of styles and price points, serving homebuilders, home improvement retailers and independent dealers.
MasterBrand’s product portfolio includes framed and frameless cabinet lines, bath vanities, closet systems and other organizational accessories.
