MasterBrand and American Woodmark to Combine in an All-Stock Transaction to Accelerate Value Delivery Through:
Industry’s most comprehensive portfolio of trusted cabinet brands and products across the value chain to benefit customers and consumers
Broadened channel partnerships, expanded geographic reach, and enhanced operating agility
Anticipated run-rate cost synergies of approximately
Fortified financial profile and increased resources expected to amplify returns, advance innovation, and accelerate growth
Companies to hold joint conference call today at
Under the terms of the agreement, at closing,
“Bringing together MasterBrand and
“Creating value through people has been the core mission of
Compelling Anticipated Strategic and Financial Benefits
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Combining two customer-centric platforms to create the cabinet industry’s most comprehensive portfolio of trusted brands and products.
- The combined company will have an expansive portfolio of world-class brands providing products across a broad price spectrum to better serve a diverse set of customers and consumers.
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MasterBrand and
American Woodmark will maintain a commitment to growing each company’s legacy brands, which channel partners know and trust.
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Broadening channel partnerships, expanding geographic reach, and enhancing operating agility.
- Channel partners are expected to benefit from greater flexibility as to where and how they purchase, and enhanced value through more sophisticated support and marketing capabilities.
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The complementary footprints of MasterBrand and
American Woodmark will help the combined company access a broader share of high-growth markets. - The combined company is projected to have an expanded operational footprint to deliver even better overall choice, service, and value to customers and consumers.
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Delivering anticipated run-rate cost synergies of approximately
$90 million 3 by the end of year three and accretion to adjusted diluted EPS in year two, both following close.- The combined organization expects to unlock meaningful cost synergies. Key drivers of these synergies are reduction of overhead and procurement expenses, manufacturing network optimization, and operational excellence through implementation of best practices and technologies from both companies.
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Anticipated cost synergies are in addition to savings initiatives underway at both MasterBrand and
American Woodmark and the future additional expected synergies from MasterBrand’s 2024 acquisition ofSupreme Cabinetry Brands, Inc. - The combined organization also expects to benefit from commercial growth opportunities resulting from its expanded footprint and stronger channel partnerships.
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Fortified financial profile and resources to amplify returns, advance innovation, and drive growth.
- The combined company’s strengthened pro forma financial profile, including an estimated net debt to adjusted EBITDA4 ratio below MasterBrand’s 2.0x target leverage ratio at transaction close, will enhance free cash flow generation, improve resilience through market cycles, and enable the combined company to deliver even greater value to shareholders.
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Combining the talent and resources of both MasterBrand and
American Woodmark is also expected to enable increased investment in growth, automation, and technology to drive further efficiencies and enhance the customer experience.
Commitment to an Empowering Culture that Drives Customer Value
The integration of MasterBrand and
Leadership, Headquarters, and Integration Plan
Upon closing,
Timing and Financing
The transaction, which has been unanimously approved by the Board of Directors of both companies, is expected to close in early 2026 subject to approval of the transaction by MasterBrand and
The transaction consideration is comprised solely of MasterBrand stock; however, MasterBrand plans to arrange a revolver expansion with its current banking group in order to pay off
At the close of transaction, MasterBrand anticipates its pro forma net debt to adjusted EBITDA5 ratio will be below MasterBrand’s target range of less than 2.0x.
MasterBrand Q2 2025 Financial Results
In a separate release issued today, which can be found on the “Investors” section of the MasterBrand website, MasterBrand reported its second quarter 2025 financial results.
In connection with today’s announcement,
These preliminary results are estimates based on information available to management of
Conference Call Details
MasterBrand and
A telephone replay will be available approximately one hour following completion of the call through
Advisors
1 |
See "Non-GAAP Financial Measures" at the end of this press release for definitions of non-GAAP measures. |
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2 |
Includes synergies related to procurement and overhead optimization, manufacturing network optimization, and general and administrative cost redundancies, and does not include implementation or transaction related costs, including restructuring charges and purchase accounting adjustments. |
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3 |
Includes synergies related to procurement and overhead optimization, manufacturing network optimization, and general and administrative cost redundancies, and does not include implementation or transaction related costs, including restructuring charges and purchase accounting adjustments. |
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4 |
See "Non-GAAP Financial Measures" at the end of this press release for definitions of non-GAAP measures. |
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5 |
See "Non-GAAP Financial Measures" at the end of this press release for definitions of non-GAAP measures. |
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6 |
See "Non-GAAP Financial Measures" at the end of this press release for definitions of non-GAAP measures. |
About MasterBrand
About
Forward-Looking Statements
Certain statements contained in this press release, other than purely historical information, including, but not limited to, statements as to the likelihood and anticipated timing of the closing of the proposed transaction, expected cost synergies and other expected benefits, effects or outcomes relating to the proposed transaction, including financial estimates and projections, MasterBrand’s business plans, objectives and expected operating results, American Woodmark’s preliminary net sales, net income and adjusted EBITDA results for the quarterly period ended
The forward-looking statements included in this press release are made as of the date of this press release and, unless legally required, neither MasterBrand nor
Additional Information and Where to Find It
MasterBrand intends to file with the
Non-GAAP Financial Measures
To supplement the financial information presented in accordance with generally accepted accounting principles in
MasterBrand Non-GAAP Financial Measures
MasterBrand uses EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share (“adjusted diluted EPS”), net debt and net debt to adjusted EBITDA ratio, which are all non-GAAP financial measures. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. MasterBrand evaluates the performance of its business based on income before income taxes, but also looks to EBITDA as a performance evaluation measure because interest expense is related to corporate functions, as opposed to operations. For that reason, MasterBrand believes EBITDA is a useful metric to investors in evaluating its operating results. Adjusted EBITDA is calculated by removing the impact of non-operational results and special items from EBITDA. Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net sales. Adjusted diluted EPS is a measure of our diluted earnings per share excluding non-operational results and special items. MasterBrand believes these non-GAAP measures are useful to investors as they are representative of its core operations and are used in the management of its business, including decisions concerning the allocation of resources and assessment of performance.
The net debt is defined as total balance sheet debt less cash and cash equivalents. MasterBrand believes this measure is useful to investors as it provides a measure to compare debt less cash and cash equivalents across periods on a consistent basis. The net debt to adjusted EBITDA ratio is calculated by dividing net debt by the trailing twelve months adjusted EBITDA. Net debt to adjusted EBITDA ratio is used by management to assess MasterBrand’s financial leverage and ability to service its debt obligations.
MasterBrand has not provided a reconciliation of its anticipated pro forma adjusted EBITDA, proforma adjusted EBITDA margin and pro forma net debt to adjusted EBITDA ratio because the information needed to reconcile these measures is unavailable due to the inherent difficulty of forecasting the timing or amount of various items that have not yet occurred and which may be excluded from EBITDA and adjusted EBITDA. Additionally, estimating such GAAP measures and providing a meaningful reconciliation for future periods requires a level of precision that is unavailable for these future periods and cannot be accomplished without unreasonable effort. Forward-looking non-GAAP measures are estimated consistent with the relevant definitions and assumptions used for historical non-GAAP measures.
American Woodmark Non-GAAP Financial Measures
(in thousands) |
|
Three Months Ended |
||
|
|
|
|
|
Net Income (GAAP) |
|
$ |
13,500 |
|
Add back: |
|
|
|
|
Income tax expense |
|
|
4,766 |
|
Interest expense, net |
|
|
4,324 |
|
Depreciation and amortization expense |
|
|
17,548 |
|
EBITDA (Non-GAAP) |
|
$ |
40,138 |
|
Add back: |
|
|
|
|
Acquisition related expenses (1) |
|
|
2,792 |
|
Restructuring charges, net (2) |
|
|
822 |
|
Change in fair value of foreign exchange forward contracts (3) |
|
|
(3,556 |
) |
Stock-based compensation expense |
|
|
2,260 |
|
Loss on asset disposal |
|
|
294 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
42,750 |
|
(1) |
Acquisition related expenses are comprised of expenses related to the currently proposed merger with MasterBrand |
|
(2) |
Restructuring charges, net are comprised of expenses incurred related to the reduction in force implemented in the second quarter of fiscal 2025, and the closure of the manufacturing facility located in |
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(3) |
In the normal course of business, |
A reconciliation of Adjusted EBITDA to Net Income, the most directly comparable measure calculated and presented in accordance with GAAP, is set forth below:
|
Corporation |
||||||||||||
(Unaudited) | (Unaudited) | ||||||||||||
52 Weeks Ended | 26 Weeks Ended | 26 Weeks Ended |
LTM Period Ended |
12 Months Ended |
|||||||||
|
|
|
|
|
|||||||||
( |
2024 |
2024 |
2025 |
2025 |
2025 |
||||||||
Net sales (GAAP) |
$ |
2,700.4 |
|
$ |
1,314.6 |
$ |
1,391.2 |
$ |
2,777.0 |
|
$ |
1,709.6 |
|
Reconciliation of Net Income to EBITDA to Adjusted EBITDA | |||||||||||||
Net income (GAAP) |
$ |
125.9 |
|
$ |
82.8 |
$ |
50.6 |
$ |
93.7 |
|
$ |
99.5 |
|
Interest expense |
|
74.0 |
|
|
34.7 |
|
38.3 |
|
77.6 |
|
|
10.3 |
|
Income tax expense |
|
42.4 |
|
|
26.3 |
|
15.7 |
|
31.8 |
|
|
27.1 |
|
Depreciation expense |
|
57.1 |
|
|
25.7 |
|
34.2 |
|
65.6 |
|
|
50.1 |
|
Amortization expense |
|
20.2 |
|
|
7.4 |
|
12.8 |
|
25.6 |
|
|
5.0 |
|
EBITDA (Non-GAAP Measure) |
$ |
319.6 |
|
$ |
176.9 |
$ |
151.6 |
$ |
294.3 |
|
$ |
192.0 |
|
[1] Acquisition-related costs |
|
25.4 |
|
|
4.4 |
|
3.5 |
|
24.5 |
|
|
- |
|
[2] Restructuring charges |
|
18.0 |
|
|
3.2 |
|
11.3 |
|
26.1 |
|
|
4.6 |
|
[3] Restructuring-related charges |
|
- |
|
|
- |
|
5.9 |
|
5.9 |
|
|
- |
|
[4] (Gain)/Loss on sale/disposal of assets |
|
(4.3 |
) |
|
- |
|
- |
|
(4.3 |
) |
|
0.5 |
|
[5] Recognition of actuarial losses & settlement charges |
|
2.7 |
|
|
- |
|
0.2 |
|
2.9 |
|
|
- |
|
[6] Purchase accounting cost of products sold |
|
2.2 |
|
|
- |
|
- |
|
2.2 |
|
|
- |
|
Adjusted EBITDA (Non-GAAP Measure) |
$ |
363.6 |
|
$ |
184.5 |
$ |
172.5 |
$ |
351.6 |
|
$ |
197.1 |
[1] Acquisition-related costs are transaction and integration costs, including legal, accounting and other professional fees, severance, stock-based compensation, and other integration related costs. These charges are primarily recorded within selling, general and administrative expenses within the Condensed Consolidated Statements of Income. Acquisition-related costs are significantly impacted by the timing and complexity of the underlying acquisition related activities and are not indicative of the Company’s ongoing operating performance. The acquisition-related costs incurred for all periods presented are primarily associated with the acquisition of
[2] Restructuring charges are nonrecurring costs incurred to implement significant cost reduction initiatives and may consist of workforce reduction costs, facility closure costs, and other costs to maintain certain facilities where operations have ceased, but which we are still responsible for.
[3] Restructuring-related charges are expenses directly related to restructuring initiatives that do not represent normal, recurring expenses necessary to operate the business, but cannot be reported as restructuring under GAAP. The restructuring-related charges for all periods presented primarily include losses on disposal of inventories from exiting product lines, gains/losses on the sale of facilities closed as a result of restructuring actions, and costs resulting from the redeployment of equipment within the manufacturing footprint.
[4] Gain on sale of asset relates to a gain resulting from the sale of facilities and land on
[5] We exclude the impact of actuarial gains and losses related to our
[6] Purchase accounting cost of products sold relates to the fair market value adjustment required under GAAP for inventory obtained in the acquisition of
No Offer or Solicitation
This press release is not intended to be and shall not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to appropriate registration or qualification under the securities laws of such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Participants in the Solicitation
MasterBrand,
View source version on businesswire.com: https://www.businesswire.com/news/home/20250806123960/en/
INVESTOR AND MEDIA CONTACTS
MasterBrand Investor Relations:
Investorrelations@MasterBrand.com
MasterBrand@thecstreet.com
(212) 372-4977
MasterBrand Media Contacts:
Media@MasterBrand.com
1-212-355-4449
MasterBrand-media@joelefrank.com
American Woodmark Investor Relations:
VP & Treasury Director
540-665-9100
American Woodmark Media Contact:
Collected Strategies
AMWD-CS@collectedstrategies.com
Source: