MBC - Earnings call 3 2023 | MasterBrand, Inc.

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Operator

Welcome to the Master Brands Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note that this conference call is being recorded. I would now like to turn the call over to Farand Pawlak, Vice President of Investor Relations and Corporate Communications.

Farand Pawlak

Thank you. Good afternoon. We appreciate you joining us for today's call. release call Andy Dave and financial Simon, Officer. We a the Chief President Chief results. on disclosing issued Officer; afternoon Executive Executive press me today quarter Banyard, are and Financial our With third this XXXX earlier Vice President

session. and question-and-answer contained section or and like this include to If associated Investors remarks to our currently actual that forward-looking Each call have will in those remind statements on expectations not at risks from in prepared website cause do anticipated. call document, it you statement current our you on available masterbrand.com. forward-looking either is the this results and the is of materially to uncertainties certain is based that may I would market differ outlook this subject

required only law. The to are tables, at and includes not the as Please the and are discussion Exchange reconciliation undertake XX-Qs, these Commission, Form XXXX necessary Additional Today's forward-looking release and XXXX update Risk at to release subsequent risks information the be of as which our available in masterbrand.com. our including the sec.gov masterbrand.com. in measures. and regarding issued at information in our certain in at non-GAAP about More with any or call updated statements and heading XX-K appears this and by these Forward-Looking in sec.gov also and in financial can section Form Statements entitled under press the earlier are the this factors afternoon refer Securities as we found available the except which speak statements, obligation today. today, of company issued does revise full any press filings year Factors

Andy, followed outlook. Our of a current with discussion third today financial include Dave from by will financial a our prepared quarter results along update XXXX our from business remarks XXXX

session. we remarks host a Finally, make before closing some will Dave question-and-answer

turn me Dave. the call over let with Now that, to

R. Banyard

XXX earnings I'm impact XX.X% Good for inside our everyone. effect to from downs, of EBITDA net same last call. third the net another was slightly over the that adjusted to quarter a in X% conference than than for to previous roughly Net the decline year. report joining the appreciate here sales in quarter by decremental quarter We afternoon, delivered decline, Darren. Despite downs. the you were sales third us our the million, of pleased our trade XX% points of higher-than-anticipated period quarter. This $XXX solid year-on-year the line today XX%, in sales roughly performance. basis Absent greater guidance. financial were brand Thanks, This XXXX with due our decline third equates less well third outlook. expectations expanded margin quarter trade to margin stated master a

estimates Our performance continued our chain brands on our master continue than strategic exceptional internal initiatives, higher This driven savings. was associates supply was margin expansion expectations. around and execution productivity by improvements as outperform the to particularly our team's

the capital sequentially third the working inventory we improvements, quarter million as by initiatives strategic Our of roughly the quarter. end to drove quarter $XX from of end another reduced the second of

us which to are our to rooted initiative our efforts, componentry drive we Grow are amongst continue chain in product commonization supply Our inventory Align allowing to reduce processes. as and

$XXX our the quarter at million These our improve inventory costs. manufacturing while year flow across is in of free threefold us helped technology reducing inventory simultaneously control RFID of the third generate prior network cash facilities, XXXX, the rollout a increase of Our labor helping over improvements quarter.

The markets moment also operational great strengthened but us sheet the served optionality the an a trends market. I'll the customers in value construction with some saw continued has demonstrates by expected running only year-over-year. performance saw remained discuss demand late into our across not our with underlying interest vary seasonality quarter. We new uncertain in flow more in which third end flat Trends builders the the navigate we and third most single-family in fourth take cash free strong are equipped resilient, as the balance has the year-to-date and to our market Our quarter, of provides rates. quarter. to this market rising

to buying of cost continue lower homebuyers. down partners providing includes mortgage other builder the large to rates This for potential discounts. Our find ownership or ways

that seen than better we've overall result, performed a market the market. the portion As of

As quarter. accelerate are costs, this and in we product their the to reduce the past, builders mentioned have third in help saw we using trade down

the We expect persist trend to through this fourth quarter.

remodel and retail the we original with year our continue as this beginning be prioritizing the to In year, quarter. line On we R&R of finish serve believe spending. At in of for than to smaller interest down the are we project overall the closer tends encouraged and portion for are R&R dealer commentary, our double-digit the for other we be market. which continued The market this to to a expected down market, fundamentals the magnitude market is of demand through third have the larger repair rate more ticket the greater customers tepid declines change that year, long-term R&R. digits. anticipate Generally mid-single the environment, we consumers the prior despite the our expectations speaking, be than to But as current and construction by homebuilders resiliency we new whole, the strong.

experienced to higher retail POS end continue past see that we decline from I retail similar relaying categories. decision some in Additionally, lower stages partners within consumers' the retail channel, believe at we and that final the underlying impact and dealer we demand our behavior. Specific channel, quarter that have performance category a buying inertia product double-digit our the further the better with saw ago, dealers extended lead the of it now trends levels. year earlier. overall we destocking we Retail But the into the through adds are consumer in this worked which mentioned this In has the is U.S. channel. to dealers, following and time are of to U.S.

as that market continue cash to forward value-priced premium the more products and moving dynamic of favor targets We expect products. the rest customers

As we our before quarter end project is dealer a multiple down network, opportunities point. looking remodel consumer from quotes trade achieve for desired and heard doing the getting price last to a

the are We new and Canada, price weak, experiment and right and remodel In to putting disciplined with construction are the promotions. remain that continue to ensure both we repair XX%. front customers products about of markets in being over declining right

are of relatively net business. our While a of small slightly XX%, this less to our presenting headwind Canada magnitude a sales, than portion year-over-year represents declines

that to quarter. continue market call, with the As this expect out the earnings demand In trade Canadian Domestic new in down half repair normal construction discussed up product from sequentially our markets. remodel, business hold weakness both expect we expect last in the to across and and second on Coupled we and summary, expect into continued third continued the quarter. anticipated. with are both third levels we our that current seeing we continues portion be to XXXX, than weakness quarter seasonality, started fourth overall the dynamics down the as play of in now of and better we

our this for trend cadence. Andy our down an incremental daily remain that At the later are backdrop encouraged provide this mind, to company with by on despite color cost we same ability growth. matching more call. sales in time, the in volume. will savings and in on business a environment deliver performance With Our the we softer investing positioning

about some little more Now to our I'd for making are of a talk initiatives. like investments we the strategic

mentioned that I investment the strong last confidence On in our gave us tech-enabled initiative. call, the spending, to particularly earnings accelerate performance our

than floor, quarter, third are call, investment on technology quarter as XXXX. These we our previous office the plant to fourth the further facing. just doubling in in And mentioned that, sequentially. of During we and opportunities plan increase across customer back our the the did spending more earnings

For overall box offering example, in initiative we'll hindered standard Much our processes. degree of robust introduce the inspect can supply processes. our automation chain accuracy. product ample a automation work technology, exist efficiency, opportunity complexity the efficiency higher across and now more believe opportunity quality initiative throughout with the in of has processes more plants, improve and product quicker we tech-enabled its area facilities, manufacturing. With quality and to quality and by in newer a like we are our able cost Using today common advanced we presents of brand meaningful processes to Master quality the see our that manufacturing. and support be but to

this While might be other yet number this of proven advanced been industry, XXXX. in year we a trialing it into has the are time-tested a areas to of newer number and solutions in industries. Accordingly, cabinet technology

efforts our expedited ], Beyond the migration. have [ plant floor cloud we around

allocate data process and creating We applications. activities. decisions near is we AP processes systems to AR. functions helping helps This based models our enable practices, automate real-time resources This have and reporting internal out-of-support leveraging inefficiencies are our on master brand efforts, With manual processes hosted for and migration like organically that value-added across constrained us functions leading varied ability optimize our master from our analytics. standardizing and shared centralized grew cloud service across also steps and us to

overall our continue technology the to in for invest we experience customers. improve Finally, to buying

channel. platforms and to are designed our improve the between new tech connection Our master brand

for in our applications the to quarter, customers. last in mentioned live bring these As we have to and tools invested team

and drive progress serve about the quarter. sharing I digital details these technology this tools this but reminder team area out efforts not going are of applications more efficiency, and such is also the these as Our Initiatives forward. as only a in forward target progress first good growth. the that making on our look way of to MasterBrand rolling these

Andy the for financial third XXXX over more hand to revised results discussion call like our and I'd quarter our of to outlook. detailed Now a

Andrea Simon

and today. I'll good everyone. quarter be third of an and with I'll Dave, our to great our you updated financial outlook. begin XXXX results here Thanks, afternoon, discuss then joining overview It's

year. were sales net $XXX.X period $XXX.X million quarter compared a same the to XX.X% last Third million, in decline

primarily in of anticipated volume Our top market. performance line the result the declines was

ASP to in primarily experienced trade As Dave our mentioned, activity. also pronounced due more some we down softening net

and period continued same XXX As in in $XXX.X the downs line expanded calls, by the strategic quarter, sustained were enactment which third brand year's this items. last Also, limited quarter year-over-year. supply damage $X the execution chain points rebates at the previous in downs trade We Jackson, we around third third tornado proceeds to health Georgia XX.X%. and insurance XXXX, in price million year. the discrete mitigated accumulated profit of down but earlier million insurance in our of was price in driven improvements favorable reduced profit mentioned $X $XXX.X was million as to was of on of initiatives the margin highlight XX.X% quarter. Gross I gross the productivity renegotiation year, particularly the margin the expansion the basis compared in profit to volume, program. X to as facility year-over-year leader The that Gross well to impacts million related to inflation from personnel in our savings, master trade top XX.X%, by benefit received want medical includes related

and in still discrete these spend $XXX.X more we medical strong margin we an initiatives, lowered general even as earlier, same lower discussed as were administrative SG&A expenses XX.X% in tech-enabled. our items, well savings quarter-over-quarter our million, particularly additional Excluding gross as year. strategic $XXX,XXX Outbound delivered invested to the period last freight X rebates expansion. compared Selling,

in of discussed, anticipated. have remains it Fortune gone. Security is previously portion if Home we now stand-alone of a you the we in I've X, But costs Instead, that XXXX compare costs. net impact were a the As allocation Brands but allocated year-over-year as XXXX, savings and

color Income higher when expect up rate strategic should the sequential year. tax delivered XXXX. spend by was tax the quarter provide quarter XX.X% to compared lower fourth to I operating of year-over-year in or outlook more as I'll the to tax by a $XX.X quarter pace this investment $XX.X in rate was offset third continue in initiatives. income shortly. We of discuss million the in interest expense, in last XX.X% a You ramp effective increase the net partially expense. a and increase income of compared higher same in million million in SG&A the quarter income we or XX.X% our million driven $XX.X on The period $XX.X third

and effective the lower driven favorable items earnings by This in quarter's year recognized tax state and income local of rate jurisdictions. this tax was mix different

related interest quarter of While of the effective million fund to XXXX, Fortune made the settlement. XXXX our debt time impacted expense the Brands was by spin. quarter third Brands rate of tax third an following In necessary the IRS dividend $XX.X by unfavorably was of audit Fortune at adjustments to

separation dilutive a Diluted have no note Adjusted external million that to points expanded were with sheet, compared were our share using diluted the there XXX loan compared our despite from prior Fortune it the the of related debt XX.X% quarter earnings in interest to party outstanding EBITDA year. earnings in XXXX. equity as year. and lower Please there any interest in under shares year. Further, diluted no As agreements prior to MVC during of of no is share same XXXX, a we assigned forma increase XX.X% recognized third did calculated earnings we expense last income not was quarter, balance $XXX instruments that external there per comparable earnings reminder, to as the therefore, was GAAP, of pro awards year million prior period third per last in year $X.XX outstanding. Adjusted Brands is pro an in million of per third million assumed were to U.S. forma share the prior period in quarter basis sales. $X.XX margin the in from XXX $XXX.X the EBITDA the equity $X.X

margin than inflation. and brand initiatives strong declines, impact the and offset mentioned trade driven Our continued master around savings particularly performance year-over-year productivity I earlier. execution chain the supply items more was These discrete of downs improvements, on by volume personnel strategic

factored we quarter into were damage previous related received at recognized proceeds in $X million quickly Jackson, the discrete that Georgia Finally, the items facility earlier To outlook. not to year. sustained as we I our in insurance recap, the earlier, mentioned tornado our X in

accumulated in our related favorable million $X.X insurance program. renegotiation rebates of the received we to Second, health

quarter. with associates these margin, expanded pleased our we delivered items, operational am excellence Excluding and the EBITDA our X discrete adjusted I still line the in

available leverage down quarters in balance resulting EBITDA quarter Net $XXX.X million successive the respectively, revolver. and quarter Turning ended debt $XXX adjusted at end from our ratio to of $XXX.X of the a on We at sheet. and to quarterly first million million, of third of the liquidity the hand on X.Xx with cash second and was net end reduction. of third debt the XXXX, X.Xx, Xx our

Our million last Operating strong $XXX.X XX, year. the the XXXX, X balance cash the business flexibility invest for months growth. financial sheet in flow was to $XXX.X September to remains million with in period for the ended comparable compared

this Our management around improvement as working year-on-year well capital improvement. as operational strong plans performance, specifically inventory and tremendous collections drove

in of We last months flat million comparable ended period expenditures the $XXX.X was million X expect year-over-year. activities. Capital This and year. million payments in million. spend in the improvement due to months $XX fourth our ended the to our $XX.X capital the a September XXXX. normal for cash expect capital were the come quarter invoices significant flow as XXXX, fourth Free now to XX, compared for as anticipate working million XXXX, slows September in for as expenditures XX, improvement plan $XXX.X $XX.X seasonal We is quarter be pace in X we

slightly expect to fourth have these we cash last spin-related As on million, quarter working payment roughly of previously, significant improvement to now items, flow increased quarter capital. be in fourth of outflows Fortune and expected positive. we capital slowing cash Brands to expenditures Because due the discussed our to increase free of are the our $XX

Finally, stock during under of million the quarter, common we repurchased $XX.X program. our our repurchase approximately stock existing

of servicing with market to outlook. trend construction we've the the Turning continue balance expect optimistic and through seen the year. about new to We steady our customers remain the our demand this

pace the fourth year-over-year persist of will servicing weaker repair we anticipate customers quarter. model market, the the conditions throughout those current new For

the Canadian expect be year-over-year. we entirety we Additionally, to market in the net will In remain the sales weak the believe of into quarter. down quarter fourth total, mid-teens fourth

shutdown Given top week, see we in our no this this quarter a benefit that XXrd fourth planning seasonality, Included X-week line the fourth quarter our performance. we typical market from December. currently will in backdrop X-week and are in shutdown holiday for is so

our adjusted normal fourth From this through calendar. As is momentum standpoint, is continue a operational an expected quarter. of the fiscal XXX result the extra to reminder, our EBITDA week

already spending this on on tech-enabled the the particularly second growth. performance investment for are in for planned discussed accelerated This again to range, even to in roughly to damage company outlook revised the outlook. On have As adjusted we adjusted half our shows outlook XXXX insurance full the we XX.X% our year collected midpoint to EBITDA in initiatives XXXX. our third Jackson, Because prior payment we a strong our last Based quarter, proceeds in final now the XXXX, expand adjusted position ability range million, environment. million raising sustained the expect increase million in margins million in in EBITDA to year-over-year call, our Georgia to XX% softer quarter. earnings our year. future for This of includes fourth at of operational EBITDA $XXX these our $XXX $XX $X.X margins related we a final outlook confidence earlier a updated to facility compared of the tornado the at

headwinds certain benefit this the expect foreign in the nearly exchange to be offset quarter. fourth by of We payment anticipated

that, outperformance. With and execution expected future yield and approximate investments us year-to-date turn business We deliver back way unchanged in of for positioning brand months the rate to tools remains interest The on initiatives growth would and XXXX net the continued like in first to and tax results the the $XX sales I Dave. will team market believe the call to expense years, savings that XXXX. year. is incremental X our further million strategic effective of master helped million of our strong Our the XXXX rate of in have tax principles established $XX for the XX.X%

R. Banyard

Andy. Thanks,

see, work lot there's can place you of the organization. across a As taking great

to Our strong results. disciplined of the their to expanded associates use dollars their on at MasterBrand deliver our level strategic as adjusted a The are of executing a and sales of continues EBITDA tools declining result progress initiatives ability and very the high EBITDA drive margins on way.

our financial impact broader Beyond the our results, stakeholders. we operational with and are efforts ESG on pleased our having I'm extremely and

we quarter, as work provider. Jimmy the During Habitat XXXX Roseland for Humanity's project third Carter participated the cabinet exclusive and in

organization Habitat excited the have at supported over way. X associates now coast we're focused and from Our to support a coast for to more events decades in

partner, this help build our material provide Carolina. a X-year a dedication to anniversary thank home last year. area. XX our their XXXX North were what to way a design, would in public a Since associates is for stand-alone take accomplish local will and to this and We As as was this we moment a work our like before I we hard pleased event than support company, labor This meaningful the for forward to what to expectations to call Charlotte bring more year, platform-level a families in community us. earnings Charlotte, and and XX,XXX look I'd our initial exceeded great

up Q&A. I open call that, with the will Now to

Operator

question first Baumgarten from comes Zelman. our the Instructions] [Operator line of Adam with

Adam Baumgarten

I just like sense because were quarter rough to seems in guess just that they meaningful. you from start, of give you a freight could the got material it costs tailwind and pretty maybe us if the

R. Banyard

Yes.

well did particular in seeing to little you're the bit that results I the cost efforts any the detail reductions that think continuous talk -- you the more from combination we've you of continued driving as I'd want add what's me, anything is price say it's elements. to improvement as put business, of -- into QX. Andy, about continued Adam, a sequentially excuse the tailwinds want

Andrea Simon

Yes, sure.

continued we and which about offset especially spend market-related So chain mentioned XX%. at those full significantly continuous and really supply was very improvement in volumes, But really remarks, Dave those our with personnel in headwinds downs, increased initiatives, QX whether the costs. in the was the our tech had, that on initiatives progress it decrementals quarter great a X% trade prepared

well us discipline in price the prepared initiatives $X.X the of had those we continued QX and that course, did in really quarter. our out. we helped cost that helps million remarks, and which was in as then, supply So chain also of discretes And improvement

R. Banyard

and thing And year. other I'll of change throughout of have still of add various the terms Adam, X labor layers the a is in the pace we in headwind, market. that

probably stabilized other of have stacked we levels. things up now all benefits I'd below There's COVID is the look what behind is come maybe The not has I'd the Materials and But still as say part freight, inflation us. forward and that's forward, I'd year, sequentially still down. so -- over been aspect say, that those here. again, are it say stabilized market the those

Adam Baumgarten

on Okay. about whether price if you just pressure, pickup Got it. outside pricing cuts obviously, retail? and can it's pricing versus or And R&R market promotions in so? or pricing generally. any talk mix, then of you Are seeing specifically dealer promotions in Or the maybe outright

R. Banyard

Yes.

of which pricing we're outsized to and I terms normally it's of tempo I similar think cabinets normal, do is what that, the not what activity seeing I would some think said environment promotional is of quarter, in normal see. we a last and have but

-- there's see There goes you maybe done get normal to where there's particularly some somebody certain that there's obviously, is retailers, that. large anxious course. in promotion a that So seasonal a that's and certainly promotions with are along deal situations

plan and given, terms I price. our but wouldn't of into we've that built we've change in the that guidance anything so And in outsized say

Adam Baumgarten

me. just of How what And And seeing much the there? I from you Got multifamily it. revenue guess your channel? lastly is are for trends

R. Banyard

because the We've the de released not focused that gets activity minimis market. as Yes. intentionally but multifamily we it's portion I of it follow time single mean the us. same family, around on for

Operator

from Our the of question comes Garik Markets. line with Loop Shmois next Capital

Garik Shmois

decline do a is sales it downs. impacted anticipate what fourth anticipation? the first in the much Just you any for in Is QX? there off, rate change similar by how of saw Or as that the trade quarter, being anticipated we

R. Banyard

the Yes, to greater than QX Garik, it we be actually impact. expect

So I'd say more mid-single digit.

more. taken line top as be We in to X% and have has QX impact hold will QX that more the in a it

said change we coming our that within that, obviously, fact fewer of we've there are the we're a with that the like But down so you margin that comfortable at terms portfolio mix when have in look cognizant and trade in drives. we're And of that. before that dollars

so to have to our at requires part for be of that's process and as prepared we points, look certain at at to that. have planning your look fixed look you that we cost. And that ahead, is And

So we're doing reacting we that. that continuing. a is think that to trend and is we're that But

Garik Shmois

Great. anything market. performance And way residential? as of given for next your the time. position new that construction there do relative in just indefinite even out new the the, guess, Is I able in any strengthening that's to target you're versus doing XXXX, you remodel Or maybe or look to period the you're outperforming more to market contemplating

R. Banyard

Yes, absolutely.

-- market, level you into the thing that but think matter the an in how a the lot there is factors I are provide. business winning you overarching mean, think I that part service in I -- biggest of given construction any new win probably of

in that's away lot a anything that, to get are we not team have to all this what the with ways. many you think think a difficult labor what And a and saw world-class builders And mix ability what and they're think that's it. we with. carried a for with name take their all them that, we adjust through I product and that lead both and lower material, was year. are cost time point when delivering appreciating from And you And them We our also at that's I of to we that's with on great were very I very focused them COVID customers. builders, reliable and through sell. it

have we're X to service wrong, deliver We because and they really of project, think large over project piece me again. that a to that our but that and they successful need level product, over ability great the don't very I out be a stamped get

because it helps it's you our through to approach internally We bring of things that when to use to tools kind bring know like customers lead them. frankly, the that can if comes lean. So we -- that that we them we

Garik Shmois

some on Understood. year, seems margins Last top or still it be fantastic the is line that trends the the It given done question you lapping cost decremental benefits, You've but just material a choppy moving taking the incremental out this you're is to forward? the fixed contemplating system. bit job like of of you and a are but seems transportation costs going discussed. like

moving provide of forward? curious that could how Any would you additional kind about the line be just great. think color to margin So incremental

R. Banyard

Sure.

that cognizant can half speak been in desire the keep this little -- QX second of we math But making I able as what to do a right the investments that's but bit think maybe, particularly we've I think Andy, also of on with you about perform the cognizant, that. we're accomplish on to now because in the the our year. We're we're to in investing business focused future. are growth want

as that to they balance. Some of fruition more think I that's develop. talk about those to But them we'll specifically come more time take and the

I part improvement so of as mindset. And is culture of think, institutionalized continuous our team, our the

that's so things. just how And part do as we of

for return forward, our But money invest than we they And it. about it's make looking fixed side like to to with build look make the unsure. have we're decisions we if cost you to us that at this we you obviously, were continuous will, as be goals money can margins. and either really variable that's to into so we the to higher contribution take always that take and going improvement optimizing and that how that investments. And the a in decremental moving we're market headroom, margin. go dictate base sure in hand, usually we for And even be of shareholders are it better along the and/or some And year, always to have world-class make and

saw hold things to the wanted before we into off we progress year. same any we'll go way so given investments, and and how until it treat we And wait

invest back. more. trim go if we'll things better, we'll And well, go things As don't

Andrea Simon

Yes.

I no if think add decremental for color it's to stay still the stated do more is QX, than can for a guidance, our the XX%. I Generally, little within helpful. year, plan we this

from QX those just experienced we that we what's continuous the that we supply continue discretes which on heavily mentioned we top to, the that we expect last a see to outlook. our to as QX. But will similar the personnel slight very million. volume discretes, initiatives chain in the continue spend, not to understand for do to trend. costs. impacting So are be going clarification decline, we that we remarks, and through year that to growth tornado on sure improvement, it the And initiative again, is the from be perspective strategic make of have quarter earlier in deflation will And course, the and offset prepared we'll downs, repeat in the QX of just again, really, That $X.X coming of the purposes insurance in QX trade payment

to just talked last to offset do about normal FX quarter. anticipate be that headwinds some we by and we some also clear, be just holiday-related which However, inefficiencies,

R. Banyard

Yes. -- will finer at which in the And And have we've shut going cost, to to in comes ahead far we we be down on we're put inefficiency, maintenance for line. QX, seen couple weeks investing that say bottom fixed take already going a to to we're the a enough of but therefore, Andy our what do said, just plants. similar, point more and

on So to of do. and that controlling QX, the but I if are as math for the as we it's good think the looking -- it's quite reasons do performance you deciding number -- that's a at a not numbers,

Operator

next question Mahoney of Cleveland from comes Research. line Our Tom with the

Thomas Mahoney

about associated it capital mentioned where the trying to from into capital seasonal year you how of a sense quarter Just to working wanted of with into a there restart fourth production in think for the a activity neutral forward this comment about looking is you some the and building end -- normal and XXXX get perspective? ask that? that's I working

R. Banyard

Yes, QX things then, Tom, And end tend a in the a at New some normal Andy, in add QX. driven and is I'll to Year inventory slight few a lot of have Lunar and detail. further that by speaking, generally may in year, build Asia. we But want a tail add of to into

shutdown of couple that in to bolster a to You have water material on the region. weeks through sooner get of

normal for wasn't shutdown year. the a our of it's we that's some to say case kind that Year had help last actually year with look hard choppiness that will our Lunar I of So and longer inventory, the of to the We through financials obviously. we had extended suppliers plenty because last course. reduce New really

X-year So at year-over-year it's hard it QX what's QX. a period particular in really normal this to into look as

say north. for does if Year. some new think on some pace And would New our is in Lunar weather market, normal to because the that, it I we have then inventory top you of have build the working construction seasonality it capital for of the to about So

so tend as out have start And that you to we higher well. QX, inventory ahead of coming so of building some activity and

those play to have to inventory. X improvements back think are Again, make still in dynamics we So year. this we

balances other So not it's kind a each each balance in of perfectly, somewhere maybe to other the out. but out, middle

dynamic have of there we're but in work is to initiatives rather starting quarter. inventory is that on order a than material supply more anything? we to there continue the needing Andy, sooner fourth here to So going improving later chain the with

Andrea Simon

volume And add, availability and fundamentally MasterBrand and more we that's driver way, to of faster initiatives customer million. couple we tech-enabled completely. that's a It's about have a our S&OP really the program, for reduction with data capital. receivables our examples And $XXX we've just collections. and then tech-enabled key just our talk inventory not customers initiative us of to about reducing talked pretty really of how inventory just kind a of bit adjusting collect allowed about inventory. developed really and Yes. We're improving the working been using year-to-date want us and and the and coming helping our our down Maybe it's need robust in secondly, a of improve embraced to

great cyclicality, performance the a So those trends the time types we expect and cash is to again, those mention just that. on on will a improvements And operational this we probably types good of QX flow despite continue. from flow expect of cash generated -- reminder

cash Fortune However, flow of CapEx we've timing that will about year-to-date. million, have related as of and to door related million the invoices of to remaining offset go the $XX about to QX again, when has it's $XX in some that payment they're stated unique related cash the final quarter out of is paid. outflows the spend most and we last that generation And we and that due done

keeps capital increasing though are again even investment, [indiscernible] that improvement have working we'll pace of We QX. the and slowing a improving, that's occur will in

that at And year-to-date. level positive, to cash a flow in but seen stated we've why we free not we be reminder just our the So that. that's expect of comments,

Thomas Mahoney

there you appreciate cadence. a the market about think but way from primarily question, but it's XXXX that environment, perspective, the curious the And side is color thinking could characterize demand into -- on Got repair then realize it. is XXXX I that my I thoughts as about you remodel out what early, there. look you're you how and have on any

R. Banyard

not today. to outlook we're give going Tom, an Yes,

of We next will, course our earnings part year. in our normal the QX on guidance as

is is that to I hard now. think the say what market I will gauge right

nimble scenario plan took that's fixed a is picture capacity. on several continuous in obviously, I that the have might We that drive so And would We year, is said, the for want just I this to be environment or think we you year. We market to and approaching case, goes. went -- a our a of do that what that's this multiple this from on down to We beyond can react we nimble was could We improvement I an We to elements outcomes we head methodology. enter saw us way that up a of of that, -- how -- any both from apply know and was to that give appropriate what down whichever is the And be the that I don't we with it both a of In there what we happen. And say lot our direction to then deliver this that our saw continuous think on at we're improvement and focusing into. next we But flexibility as do behavior the year. scenarios hard standpoint can overall work flexibility -- environment. that designed happen. year. applies really look in might think planning. coming. to be able that And variety action strategy think wide we to

so week about So that's bit market quite changes our because, right ready week tell think not planning how yet what planning. you that a we done about We've we now. frankly, budget, but here the to far to with really think

And really that a which we're little we you most likely. settle so is letting out scenario before bit tell think we

Operator

Sidoti. comes next Our from question the Romero Julio line of with

Unknown Analyst

this on talk Hannan Julio. This guys about interest you the rates. about a Curious bit Alex think we value and chain? the indirectly across of is Could impact higher how little for directly

R. Banyard

in mean damper Sure. higher on I I activity, in activity. ticket housing higher think put a general particular, interest rates housing

going that's home against equity. the borrow obviously, direct planning input home on purchase, people certain that to if to because might they're most So the of borrowing projects cost it's a home be, to do a, their people or the

year housing. tag plays what the think when What as it decision-making and new rates interest them around stability a generally So regard says that comfortable construction so been is action. housing or the year. a, an is along in consumer year, for that money has wealth housing behaves, is that when price seeing consumer there's good in I in particular that I a construction in factor it's say spend what I you're this a home paid feels And way continues think gives interest they another the this speaking, market demand that rates stabilize zone, when is -- the the interest the that significantly taking new home plug think it's there's proof effect worth to have thing key the I in the in rates with very they've market. would that interesting not underlying feel nicely. high for point And to increased and because demand, the with for world more the

look rates things It's change of also at I inflation. absolute for, change and an rate look the similar there's when interest I look rate generally a, cost but at, of to like thing. consumers don't So just sort of to

in We that So that while. rates. for the coming saw new although in higher that some into rates, I XXXX And of construction XXXX. look sparked in a demand stabilized I for think out stability

something of can all So you people stable. I -- that's plan you plan mean just see we way. better when that kind think

that -- for very came skyrocketed attention last because And week, to spend a situation time And mortgage. mean a it's drives paying now. in week. significantly the a looking what more Fed XX-year is XX-year I'm I what volatile says what really right than then down ago. I'd the that's a XX-year month it So

market. that's long think when but so is It's lot a when world for way of week. tend and stop And that's it a in this to of I people to doing we're period volatility will time, normal live similar don't that in that. the just probably it's stock like stuff a

Unknown Analyst

And and you talked the helpful. tech Super a plant chain today, appreciate forward, migration, cloud there. I color Yes. supply strategic platforms. about number of initiatives

initiative think across you most to will be the is XXXX the impactful portfolio, as curious, there you strategic look Just something P&L?

R. Banyard

Yes.

which the most impactful we've I'd the out, And you core into to our that issue at that these organization that that now thing even day around these last issues, And how we Is out a every in anything solving. itself that culture, embedded working that's do the culture in you're driven and problems but is, on and when that solutions has in why with lean which issues think it do an drive This improvement initiatives. at continuous block. job you're helps and but to X always solve. way. come problem of you to helps into spreads strategic the the run very I have helps you years. day over a road invariably that's culture day-to-day solving because roadblock get to problem it and learning is a complicated, say, of crisp wonderful great team projects really And that's get forward do roadblock, done you fact-based that and

It's tangible can out do. helps we front that's an that have but things the issue really that drive working it excited I initiatives only you're the get do and to forward to underlies savings, we dollar also organization key think that it of everything -- I think in I move tech that's not does as so culture So about you going that that's at we're pace. always And on. whatever that facing. But help am

growth the market all do think I grow business beyond rate. this on focused they're how we

them Some today direct longer when our we and you take prepared some to in little And described about of of impact. excited things but we're them them, think remarks, are a them. those plant germinate I

Unknown Analyst

context for couple expecting And last we similar appreciate to next buybacks Should quarters? X respect somewhat of pacing over with the me. be there. the I

R. Banyard

Yes.

of I think the -- through we're still working look kind forward our capital deployment. on

we capital I deployment the some first think and with think foremost, great investments We at return. our it's priorities, I have business. look great in as invest

really is for good right Secondly, continue us, our position, we're to which -- spot to focus on think a debt in I now.

don't sheet. happen face is front to a us. the in always know balance that's to in great yourself It's we think a I think a bolster of what it's have going market of that's in way prudent I But great just -- uncertain. we

stock, are a returning good if the cash the shareholders, in a X we buying to we're of market think cheap investment. priorities top we're think it's keep way going We terms those we look at I it. the to So is think

Andrea Simon

the about of save a point time, reference, of have as you approved some QX. million $XX of on we Just for the left end currently I program the

Operator

no comments. further I time. floor Pawlak closing And questions the for over to are Farand There back to like this turn at would

Farand Pawlak

and Thank support the our you, and you in interest forward We operator. your us. future. concludes everyone, speaking you, call. to with This Thank appreciate joining for look

Operator

you. Thank

participation. at lines may your now your time. this disconnect for you You Thank

MasterBrand (MBC) 7 Nov 232023 Q3 Earnings call transcript