Core Insights - Astellas Pharma U.S. Inc. and MBC BioLabs announced DeepSeq.AI, Inc. and Serna Bio as winners of the Future Innovator Prize, which provides access to advanced lab facilities and Astellas' R&D capabilities [1][2][3] Group 1: Prize Overview - The Astellas Future Innovator Prize is awarded to pioneering scientists with innovative research that aligns with Astellas' Focus Area Approach, including Genetic Regulation, Immuno-Oncology, Targeted Protein Degradation, and Blindness & Regeneration [5] - This year, Astellas received over 50 applications, with the winners selected based on the strength of their innovation and therapeutic potential [2][5] Group 2: Company Profiles - DeepSeq.AI focuses on AI-driven large molecule discovery, utilizing high-throughput wet lab assays and generative models to optimize biologics, claiming to accelerate IND timelines by 10x and reduce costs by 50% [9] - Serna Bio is developing small molecules to upregulate protein translation by targeting functional RNA structures, leveraging a comprehensive platform for target discovery and chemical optimization [10] Group 3: Statements from Leadership - Issei Tsukamoto from Astellas emphasized the importance of supporting startups that have the potential to transform patient care globally [3] - Doug Crawford from MBC BioLabs highlighted the role of the Future Innovator Prize in providing access to a community of entrepreneurs and expert mentorship to accelerate early-stage breakthroughs [4]

Part I - Financial Information [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements detail the company's performance for Q1 2025 [Condensed Consolidated Statements of Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q1 2025 saw higher sales but significantly lower operating and net income compared to the prior year Q1 2025 vs Q1 2024 Income Statement Highlights | Metric | Q1 2025 (13 Weeks Ended Mar 30) | Q1 2024 (13 Weeks Ended Mar 31) | Change | | :--- | :--- | :--- | :--- | | **Net Sales** | $660.3 million | $638.1 million | +3.5% | | **Gross Profit** | $202.2 million | $204.7 million | -1.2% | | **Operating Income** | $37.1 million | $62.8 million | -40.9% | | **Net Income** | $13.3 million | $37.5 million | -64.5% | | **Diluted EPS** | $0.10 | $0.29 | -65.5% | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities increased slightly as of March 30, 2025, driven by a rise in long-term debt Balance Sheet Summary | Metric | March 30, 2025 | December 29, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $689.1 million | $650.7 million | | **Total Assets** | $2,955.8 million | $2,929.8 million | | **Total Current Liabilities** | $362.5 million | $395.4 million | | **Long-term Debt** | $1,058.2 million | $1,007.8 million | | **Total Liabilities** | $1,649.1 million | $1,635.1 million | | **Total Equity** | $1,306.7 million | $1,294.7 million | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company experienced a net cash outflow from operations in Q1 2025, a reversal from the prior year's inflow Cash Flow Summary (13 Weeks Ended) | Activity | March 30, 2025 | March 31, 2024 | | :--- | :--- | :--- | | **Net Cash (Used in) Provided by Operating Activities** | $(31.4) million | $18.7 million | | **Net Cash Used in Investing Activities** | $(9.8) million | $(7.0) million | | **Net Cash Provided by (Used in) Financing Activities** | $33.5 million | $(7.1) million | | **Net (Decrease) Increase in Cash** | $(7.5) million | $5.0 million | [Notes To Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20To%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the Supreme acquisition's impact, revenue disaggregation, debt refinancing, and share repurchases - On July 10, 2024, the company acquired Supreme Cabinetry Brands for **$527.3 million**, funded by cash and revolving credit[26](index=26&type=chunk)[29](index=29&type=chunk) - For the 13 weeks ended March 30, 2025, Supreme contributed **$60.8 million in Net Sales** and **$4.1 million in Net Income**[26](index=26&type=chunk)[29](index=29&type=chunk) Net Sales by Channel (13 Weeks Ended) | Channel | March 30, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Dealers | $353.1 million | $315.0 million | | Retailers | $223.5 million | $242.9 million | | Builders | $83.7 million | $80.2 million | | **Total** | **$660.3 million** | **$638.1 million** | - In June 2024, the company completed a refinancing transaction, issuing **$700.0 million of 7.00% Senior Notes** due 2032 and entering a new credit agreement with a **$750.0 million revolving credit facility**[54](index=54&type=chunk)[55](index=55&type=chunk)[57](index=57&type=chunk) - The company recorded restructuring charges of **$4.7 million in Q1 2025**, primarily for severance costs to align its workforce with demand[61](index=61&type=chunk) - During Q1 2025, the company repurchased **838,984 shares for approximately $11.4 million**[79](index=79&type=chunk)[82](index=82&type=chunk) - A new **$50.0 million share repurchase program** was authorized in March 2025[79](index=79&type=chunk)[82](index=82&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes sales growth to the Supreme acquisition, which offset declines in the legacy business [Results of Operations](index=30&type=section&id=Results%20of%20Operations) The Supreme acquisition drove a 3.5% net sales increase, but higher costs eroded gross and operating margins - Net sales increased **$22.2 million (3.5%) YoY**, with the Supreme acquisition contributing **$60.8 million**[99](index=99&type=chunk) - Legacy business sales **declined by $38.6 million** due to lower volume in repair/remodel and single-family new construction markets[99](index=99&type=chunk) - Cost of products sold as a percentage of net sales **increased to 69.4% from 67.9% YoY**, driven by higher manufacturing costs and unfavorable fixed cost leverage[101](index=101&type=chunk) - SG&A expenses **rose by $16.2 million (11.8%)**, primarily due to the inclusion of Supreme ($13.0 million), increased associate-related costs ($2.7 million), and acquisition-related costs ($1.6 million)[102](index=102&type=chunk) - Interest expense **increased to $19.4 million from $14.1 million** due to a higher outstanding debt balance following the refinancing transaction for the Supreme acquisition[104](index=104&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by a revolving credit facility, with total debt standing at $1,058.2 million - The company completed a major debt refinancing in June 2024, issuing **$700 million in Senior Notes** and establishing a new **$750 million revolving credit facility**[111](index=111&type=chunk) - As of March 30, 2025, the company had **$1,058.2 million in outstanding debt** and was in compliance with all debt covenants[114](index=114&type=chunk)[115](index=115&type=chunk) - Net cash used by operating activities was **$31.4 million in Q1 2025**, compared to **$18.7 million provided in Q1 2024**, primarily due to a larger increase in accounts receivable and inventory[117](index=117&type=chunk) - Net cash from financing activities was **$33.5 million**, reflecting **$50 million in net borrowings** to fund working capital needs and **$11.4 million used for stock repurchases**[119](index=119&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Market risk disclosures remain materially unchanged from the 2024 Annual Report on Form 10-K - There have been **no material changes in market risk** since the last Annual Report on Form 10-K[123](index=123&type=chunk) [Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the evaluation date, March 30, 2025[124](index=124&type=chunk) - **No changes in internal control over financial reporting** occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[125](index=125&type=chunk) Part II - Other Information [Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation and is addressing a now-annulled tax assessment in Mexico - The company is a defendant in ordinary routine litigation and does not consider any pending action to be **material**[127](index=127&type=chunk) - A Mexican tax authority (SAT) issued a **~$54.9 million tax assessment** for the 2018 tax year, which the SAT later annulled[128](index=128&type=chunk) - The company is taking legal action to make the annulment final and believes the risk of additional loss is **remote**[128](index=128&type=chunk) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) Key risks include supply chain efficiency, third-party supplier dependence, and changing government regulations - Risks related to improving organizational productivity and global supply chain efficiency, including **potential interruptions in raw material supply**, could adversely affect operations[131](index=131&type=chunk)[132](index=132&type=chunk) - The company is exposed to global business risks, including **uncertain trade environments, tariffs, and political changes** in countries where it manufactures or sources materials[133](index=133&type=chunk) - Dependence on third-party suppliers presents risks of **supply disruption, quality issues, and cost increases**[135](index=135&type=chunk) - Changes in government and industry regulations related to trade, health, safety, taxes, and the environment could **increase costs and impact results**[137](index=137&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 838,984 shares for $11.4 million in Q1 2025 under its authorized programs Share Repurchases in Q1 2025 | Period | Total Shares Purchased | Average Price Paid per Share | Maximum Amount Remaining for Purchase | | :--- | :--- | :--- | :--- | | **Feb 24 - Mar 30, 2025** | 838,984 | $13.60 | $60,015,416 | | **Q1 2025 Total** | **838,984** | **$13.60** | | - As of March 30, 2025, **$10.0 million remained** under the 2023 Share Repurchase Authorization and **$50.0 million remained** under the new 2025 Share Repurchase Authorization[139](index=139&type=chunk) [Other Information](index=39&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted, modified, or terminated Rule 10b5-1 trading plans during the quarter - **No directors or executive officers** adopted, modified, or terminated any Rule 10b5-1 trading plans during the quarter[142](index=142&type=chunk)

Financial Data and Key Metrics Changes - The company reported net sales of $660 million for the first quarter of 2025, representing a 3% increase compared to the same period last year [6] - Adjusted EBITDA was $67 million, with an adjusted EBITDA margin of 10.2%, which is 220 basis points lower than the same period last year [8][30] - Free cash flow was negative $41 million, a decline from positive $12 million in the same period last year [9][33] - Net income decreased to $13.3 million from $37.5 million year-over-year, primarily due to higher selling, general, and administrative expenses [28] Business Line Data and Key Metrics Changes - The Supreme acquisition contributed to a 10% growth, while legacy business saw a 2% increase in net average selling prices (ASP) [7] - Market volume declines of 9% were noted in the base business, particularly affecting customers in the repair and remodel market [7] - Builder Direct sales increased by over 4% compared to the prior year, despite declines in the new construction market [8] Market Data and Key Metrics Changes - Year-over-year market volume declines were observed across all channels and end markets in the first quarter [10] - The new construction market is expected to decline by mid-single digits for the full year 2025, influenced by lower foot traffic and builder commentary [12] - The repair and remodel market is anticipated to decline by high to mid-single digits for 2025, with fluctuations in order patterns noted [14][16] Company Strategy and Development Direction - The company is focusing on cost preservation and maintaining a strong balance sheet while investing in targeted growth areas [17] - Facility consolidations are underway to reduce costs and improve service, with expected financial benefits materializing in the third quarter [19] - Strategic initiatives include "Align to Grow," "Lead through Lean," and "Tech Enabled," aimed at positioning the company for future growth [20][25] Management's Comments on Operating Environment and Future Outlook - Management noted that the current demand environment is choppy, with expectations of continued weakness in the second half of 2025 [10][12] - Tariffs are impacting consumer confidence and large ticket purchases, contributing to a more cautious outlook for the year [16][39] - The company anticipates adjusted EBITDA for 2025 to be in the range of $315 million to $365 million, with a focus on balancing near-term performance and long-term growth [41][42] Other Important Information - The company ended the quarter with $113.5 million in cash and $358.6 million in liquidity available [30] - A new share repurchase program was authorized, allowing for the repurchase of up to $50 million of common stock [33] Q&A Session Summary Question: How is the company thinking about pricing in relation to tariffs? - Management indicated that additional pricing actions are necessary to counteract tariff impacts, using a surcharge methodology [46][48] Question: What is the expected demand cadence for Q2? - Management expects to see normal seasonality in Q2, but acknowledges challenges due to tariff costs and inefficiencies in certain factories [53][66] Question: How will margin progression look in Q2? - Margins are expected to improve from Q1, but not to the company's standards due to fixed cost pressures and tariff impacts [64][66] Question: What factors will influence the EBITDA guidance range? - The range is primarily dictated by market demand and the company's ability to gain market share amidst tariff uncertainties [69][70] Question: How does the company view its position relative to tariffs? - The company believes it is better insulated from tariffs due to its production being predominantly in the U.S., allowing it to absorb volume changes more effectively [75][78]

Financial Data and Key Metrics Changes - The company reported net sales of $660 million for the first quarter of 2025, representing a 3% increase compared to the same period last year [6][24] - Adjusted EBITDA was $67 million, with an adjusted EBITDA margin of 10.2%, which is 220 basis points lower than the same period last year [7][28] - Net income decreased to $13.3 million from $37.5 million year-over-year, primarily due to higher selling, general, and administrative expenses [26][30] - Free cash flow was negative $41 million, compared to positive $12 million in the same period last year [9][30] Business Line Data and Key Metrics Changes - The Supreme acquisition contributed to a 10% growth, while the legacy business saw a 2% increase in net average selling prices (ASP) [6][7] - Builder Direct sales increased by over 4% year-over-year, despite declines in the new construction market [7] - The repair and remodel market experienced mid-single-digit declines, particularly in lower-priced products [13][14] Market Data and Key Metrics Changes - Year-over-year market volume declines were observed across all channels and end markets, with the new construction market down low single digits [10][12] - The Canadian market saw high single-digit declines in both new construction and repair and remodel markets [15] - Overall end market demand is now expected to decline by high to mid-single digits in 2025, revised from previous expectations [16] Company Strategy and Development Direction - The company is focusing on cost preservation and maintaining a strong balance sheet while investing in targeted growth areas [16][19] - Facility consolidations are underway to improve efficiency and reduce costs, with expected benefits materializing in the third quarter [17][18] - Strategic initiatives include Align to Grow, Lead through Lean, and Tech Enabled, aimed at positioning the company for future growth [19][20][22] Management's Comments on Operating Environment and Future Outlook - Management noted that the current demand environment is choppy, with expectations for continued weakness in the second half of 2025 [10][12] - Tariffs are impacting consumer confidence and purchasing behavior, leading to a cautious outlook for large-ticket items [15][36] - The company anticipates adjusted EBITDA for 2025 to be in the range of $315 million to $365 million, with a wider range due to tariff uncertainties [38] Other Important Information - The company authorized a new share repurchase program of up to $50 million [30] - Capital expenditures for 2025 are expected to be between $75 million and $85 million, down from previous estimates [39] Q&A Session Summary Question: Thoughts on pricing and demand impacts - Management indicated that additional pricing actions are needed to counteract tariff impacts, with a focus on timing and customer negotiations [43][44] Question: Demand cadence and seasonality - Management expects a normal seasonal pattern in Q2, but acknowledges challenges due to tariffs and operational adjustments [49][50] Question: Margin progression in Q2 - Margins are expected to improve from Q1, but not to desired levels due to inefficiencies and tariff costs [58][61] Question: Factors affecting EBITDA guidance - The wide range in EBITDA guidance is primarily driven by market demand and the company's ability to gain market share [63][65] Question: Positioning relative to tariffs - The company is better insulated from tariffs due to its U.S.-based production, allowing it to absorb volume changes if necessary [70][72] Question: ASP trends and inventory growth - Management noted that inventory growth is partly due to safety stock and not a significant pre-buy, with plans to adjust inventory levels as demand stabilizes [78]

Financial Performance - Net sales for Q1 2025 were $660.3 million, a 3% increase year-over-year, driven by a 10% contribution from the Supreme acquisition and a 2% increase from average selling price improvements[4] - Net income decreased 65% year-over-year to $13.3 million, resulting in a net income margin of 2.0%, down from 5.9% in the prior year[5] - Adjusted EBITDA was $67.1 million, a decrease from $79.4 million in Q1 2024, with an adjusted EBITDA margin of 10.2%, down 220 basis points year-over-year[6] - The company reported a diluted earnings per share of $0.10, compared to $0.29 in the prior year, and adjusted diluted earnings per share of $0.18, down from $0.31[6] - Operating income fell to $37.1 million, a decline of 41.0% from $62.8 million in the previous year[26] - Net income for the period was $13.3 million, a significant decrease of 64.5% compared to $37.5 million in the same quarter last year[26] - Adjusted EBITDA was $67.1 million, down from $79.4 million, reflecting a margin of 10.2% compared to 12.4% in the prior year[29] - Basic and diluted earnings per share were both $0.10, down from $0.30 and $0.29 respectively in the previous year[29] Debt and Cash Flow - As of March 30, 2025, total debt was $1,058.2 million, with a net debt to adjusted EBITDA ratio of 2.7x[8] - Free cash flow was negative $41.2 million for the thirteen weeks ended March 30, 2025, compared to positive $11.7 million for the same period in 2024[8] - The company reported a net debt of $944.7 million, an increase from $554.3 million year-over-year, with a net debt to adjusted EBITDA ratio of 2.7x[38] - Free cash flow for the quarter was negative at $(41.2) million, compared to positive free cash flow of $11.7 million in the same quarter last year[40] - Cash and cash equivalents decreased to $113.5 million from $153.7 million year-over-year[38] Future Outlook - The company expects organic net sales performance to outperform the underlying market in 2025, driven by new products and pricing actions[9] - Adjusted EBITDA for 2025 is projected to be in the range of $315 to $365 million, with an adjusted EBITDA margin of approximately 12.0% to 13.5%[12] - The company plans to focus on preserving margins through cost actions and facility rightsizing amid economic uncertainty[11] Shareholder Actions - MasterBrand repurchased approximately 839 thousand shares of common stock for about $11.4 million during the first quarter[8] Profitability Metrics - Gross profit decreased to $202.2 million, resulting in a gross profit margin of 30.6%, down from 32.1% in the prior year[26] - The company incurred restructuring charges of $4.7 million, significantly higher than $0.4 million in the prior year[29]

Core Insights - MasterBrand Cabinets (NYSE: MBC) reported a quarter that was contextually acceptable, but sales are continuing to decline due to unexpected softness, leading to a decrease in share price to the mid-$14 range post-earnings [1] Company Performance - The company experienced a decline in sales, which was described as "unexpected" softness, impacting overall performance [1] - Following the earnings report, shares of MasterBrand Cabinets traded down, reflecting market reaction to the sales trend [1] Valuation Concerns - The primary concern regarding valuation is linked to the ongoing sales decline, raising questions about the company's future performance and market position [1]

Core Insights - Astellas Pharma U.S. Inc. and MBC BioLabs have launched the Astellas Future Innovator Prize to support early-stage life-science companies and entrepreneurial scientists by providing access to state-of-the-art facilities and Astellas' expertise [2][3][4] Group 1: Prize Details - The Astellas Future Innovator Prize offers up to two awards for innovative research ideas that align with Astellas' focus areas, including Blindness & Beyond, Genetic Regulation, Immuno-Oncology, Cell Therapy, and Targeted Protein Degradation [5][6] - Awardees will receive one year of priority access to MBC BioLabs' facilities and Astellas' research and development resources [6] Group 2: Application Process - The application period for the Astellas Future Innovator Prize runs from February 27 to April 1, 2025, requiring participants to submit a non-confidential company presentation and a one-page executive summary [4][6] - The selection process for the prize is solely at Astellas' discretion, with no appeals allowed [6] Group 3: Company Background - Astellas is a global life sciences company focused on developing transformative therapies in areas such as oncology, ophthalmology, urology, immunology, and women's health, addressing high unmet medical needs [8] - MBC BioLabs has supported over 350 startups since its inception in October 2013, facilitating 176 clinical trials and the introduction of 71 products to market, raising nearly $20 billion in funding [10]

Company Overview - MasterBrand is the largest manufacturer of residential cabinets in North America, leveraging superior product quality and innovative design to drive value[170]. - Following the Separation from Fortune Brands, MasterBrand became an independent publicly-traded company on December 15, 2022, with 128.0 million shares issued[174]. - The Separation allows MasterBrand to focus on strategic growth opportunities and operational effectiveness tailored to its industry[175]. Acquisition and Expansion - The company completed the acquisition of Supreme on July 10, 2024, enhancing its portfolio of premium cabinetry and expanding its dealer network[171]. - The acquisition was funded through cash on hand and proceeds from a revolving credit facility, indicating a strategic approach to capital deployment[171]. - The acquisition of Supreme contributed $121.2 million in incremental sales in the second half of 2024[184]. Financial Performance - Net sales for fiscal 2024 were $2,700.4 million, a decrease of $25.8 million or 0.9% compared to $2,726.2 million in fiscal 2023[183]. - Gross profit decreased by $24.4 million or 2.7% to $877.0 million in 2024 from $901.4 million in 2023[183]. - Operating income fell to $235.7 million, down $70.6 million or 23.0% from $306.3 million in the previous year[183]. - Net income for 2024 was $125.9 million, a decline of $56.1 million or 30.8% compared to $182.0 million in 2023[183]. - Selling, general and administrative expenses increased by $33.4 million or 5.9% to $603.1 million in 2024, primarily due to acquisition-related costs[187]. - Interest expense rose to $74.0 million in 2024, an increase of $8.8 million or 13.5% from $65.2 million in 2023[189]. - The effective tax rate for 2024 was 25.2%, up from 23.8% in 2023, primarily due to increased valuation allowance and nondeductible transaction costs[193]. Cash Flow and Liquidity - Net cash provided by operating activities decreased to $292.0 million in 2024, down from $405.6 million in 2023, primarily due to a decrease in net income from $182.0 million in 2023 to $125.9 million in 2024[209]. - Net cash used in investing activities increased significantly to $580.8 million in 2024, compared to $56.9 million in 2023, largely due to the acquisition of Supreme for $514.5 million[210]. - Net cash provided by financing activities was $269.6 million in 2024, a turnaround from net cash used of $299.9 million in 2023, aided by a refinancing transaction[211]. - The company maintained a minimum interest coverage ratio of 3.00 to 1.00 as per the 2024 Credit Agreement, with a net leverage ratio not exceeding 3.50 to 1.00 for fiscal quarters ending on or prior to December 31, 2024[204]. Debt and Obligations - The company refinanced its debt in June 2024, issuing $700.0 million of Senior Notes due 2032 to fund the acquisition of Supreme and repay existing debt[198]. - As of December 29, 2024, the company had $1,007.8 million in outstanding third-party borrowings, net of deferred financing fees[206]. - Total contractual cash obligations as of December 29, 2024, amounted to $1,636.9 million, including $1,020.0 million in debt payments and $486.8 million in interest payments[217]. Operational Efficiency - MasterBrand's operational model emphasizes standardization and lean manufacturing capabilities to enhance efficiency and cost management[180]. - The company aims to utilize technology and data to improve the consumer experience from visualization to delivery and installation[170]. - MasterBrand's financial condition and liquidity are underpinned by a tailored capital structure that enhances operational flexibility and resource allocation[180]. Inventory and Impairment - Inventory provision was recorded at $17.0 million as of December 29, 2024, compared to $15.9 million as of December 31, 2023, indicating an increase in provisions for obsolete or slow-moving inventory[233]. - An impairment charge of $26.0 million was recognized for an indefinite-lived tradename in Q2 2022, followed by an additional charge of $12.8 million in Q4 2022 due to shifts in forecasted revenue growth rates[240]. - The carrying value of the impaired indefinite-lived tradename was $46.2 million as of December 29, 2024, and December 31, 2023[240]. - A second indefinite-lived tradename incurred an impairment charge of $7.6 million in Q4 2022, with a carrying value of $19.1 million as of December 29, 2024, and December 31, 2023[241]. - The fair values of impaired tradenames were measured using the relief-from-royalty approach, with significant assumptions including forecasted revenue growth rates and market-participant discount rates[242]. Risk Management - The company does not enter into derivatives for trading or speculative purposes but uses financial instruments to manage foreign currency exchange rate risks[249]. - The estimated potential loss under foreign exchange contracts from movement in foreign exchange rates would not have a material impact on the company's results of operations[252]. - The company assesses goodwill for impairment at least annually, with qualitative and quantitative tests based on market conditions and operational performance[234]. - Future changes in market-participant discount rates or projected cash flows could lead to significant adjustments in the estimated fair values of intangible assets and goodwill[232].

Financial Data and Key Metrics Changes - The company reported net sales of $668 million in Q4 2024, a decrease of 1% compared to the same period last year [8][37] - Adjusted EBITDA for Q4 was $75 million, with a margin of 11.2%, down 150 basis points year-over-year [13][46] - Full year 2024 net sales totaled $2.7 billion, also down 1% from the previous year [46] - Net income for Q4 was $14 million, a decline from $36.1 million in the same period last year [42] - Diluted earnings per share were $0.11 in Q4 2024, down from $0.28 in the prior year [45] Business Line Data and Key Metrics Changes - The repair and remodel business experienced a year-over-year volume decline of 6% in the legacy business during Q4 [9] - The acquisition of Supreme Cabinetry Brands contributed a 9% year-over-year increase to net sales [13] - Gross profit for Q4 was $203.3 million, down 9% compared to $223.1 million in the same period last year [38] Market Data and Key Metrics Changes - The U.S. single-family new construction market was estimated to be slightly up year-over-year in Q4, with expectations of flat to low single-digit declines for the full year 2025 [18][20] - The Canadian market saw low single-digit declines across both new construction and repair and remodel markets [23] Company Strategy and Development Direction - The company is focusing on three strategic initiatives: Align to Grow, Lead Through Lean, and Tech Enabled, with plans to invest an incremental $15 million in the Tech Enabled initiative in 2025 [30][64] - Cost reduction measures have been identified, including targeted headcount reductions and reduced discretionary spending [29] Management's Comments on Operating Environment and Future Outlook - Management noted that the market remained choppy throughout Q4, with expectations of continued choppiness through at least the first half of 2025 [22] - The company anticipates overall market demand to be down low single-digits in 2025, but expects annual net sales to be up mid-single-digits due to the Supreme acquisition [58][60] Other Important Information - The company ended the year with $120.6 million in cash and a net debt to adjusted EBITDA leverage ratio of 2.4 times [54][55] - Capital expenditures for 2024 were $80.9 million, an increase from $57.3 million in the prior year [56] Q&A Session Summary Question: Can you elaborate on the 2025 guidance regarding revenue and margins? - Management indicated that while the first half of 2025 may be softer, February showed a return to normal demand levels, providing confidence for the year [78][80] Question: What is the status of pricing increases? - Pricing increases have been mostly delayed, with the dealer network realizing prices quicker than other channels [84][85] Question: How did the Supreme business perform during the recent market fluctuations? - The Supreme business was more resilient during the late November through January period compared to other segments [87] Question: Can you clarify the impact of mix on pricing? - The mix was primarily responsible for pricing declines, with a shift towards lower price point products affecting overall pricing [92][93] Question: What recent improvements have been observed in the market? - The repair and remodel segment has shown signs of recovery in February, returning to pre-holiday levels [97][100]

Q4 and FY 2024 Investor Presentation February 18, 2025 Forward-Looking Statements Certain statements contained in this presentation, other than purely historical information, including, but not limited to estimates, projections, statements relating to our business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are forward-looking statements. Statements preceded by, followed by or that otherwise include the word "believes," "expects," "anticipates ...