Financial Data and Key Metrics Changes - In Q4 2025, the company reported net sales of $645 million, a 3.5% decrease from $667.7 million in Q4 2024, reflecting ongoing demand pressure and market decline [5][20] - Adjusted EBITDA for Q4 was $35 million, down from $75 million in the prior year, with an adjusted EBITDA margin of 5.4%, a decline of 580 basis points year-over-year [6][24] - Full-year 2025 net sales were $2.7 billion, up 1% from the previous year, driven by contributions from the Supreme acquisition and pricing improvements [25][26] - Net loss for Q4 was $42 million compared to net income of $14 million in Q4 2024, resulting in a negative net income margin of 6.5% [23][28] Business Line Data and Key Metrics Changes - In the new construction market, U.S. single-family construction declined high single digits in Q4 and mid-single digits for the full year, with MasterBrand's new construction sales outperforming the broader market [8][9] - The U.S. cabinet repair and remodel market also saw a mid-single-digit decline, driven by low existing home turnover and consumer confidence issues [9][10] - The Canadian market experienced similar challenges, with mid-single-digit declines in both new construction and repair and remodel demand [10] Market Data and Key Metrics Changes - The overall market has contracted for three consecutive years, with elevated interest rates and affordability concerns continuing to constrain activity [8] - The company expects the U.S. cabinet repair and remodel demand to remain subdued in 2026, closely tied to financing conditions and consumer confidence [10][11] - The Canadian market is anticipated to remain pressured in 2026 due to similar dynamics affecting consumer sentiment and low resale activity [10] Company Strategy and Development Direction - The company is focused on maintaining financial flexibility through targeted cash management and cost reductions, with $30 million in planned cost reductions for 2026 [12][34] - MasterBrand aims to capture synergies from the Supreme integration and the pending American Woodmark transaction, expecting approximately $90 million in run-rate cost synergies by the end of year three post-close [17][29] - The company is implementing a coordinated mitigation strategy to manage tariff impacts, including sourcing flexibility and operational adjustments [15][32] Management's Comments on Operating Environment and Future Outlook - Management noted that the operating environment remains challenging, with demand softness and affordability pressures expected to persist into 2026 [40][41] - The company anticipates a more meaningful recovery in 2027 as affordability improves and housing activity normalizes [12][41] - Management emphasized the importance of disciplined execution and cash management to navigate the current uncertainty [40] Other Important Information - The company ended 2025 with $183.3 million in cash and $441.9 million in liquidity available under its revolving credit facility, with net debt at $791.2 million [29][30] - Tariffs continue to pressure costs, with a 25% tariff on cabinets and related products remaining in place throughout 2026, and a 50% tariff scheduled for January 2027 [13][14] Q&A Session Summary Question: Full-year market outlook breakdown by end channel - Management indicated that both the builder and retail markets are expected to decline mid-single digits, with uncertainty around the spring season influencing the full-year outlook [45][46] Question: Pricing realization and competitive behavior - Management noted that the pricing realization decelerated due to a mix shift towards lower price points and the timing of tariff mitigation efforts [47][48] Question: Residential construction weakness and sales progression - Management observed a significant drop-off in residential construction sales late in the quarter, similar to the previous year, impacting overall volume and efficiency [52] Question: Details on restructuring actions and expected savings - Management clarified that the $30 million in expected savings for 2026 is the annualized amount, aimed at adjusting the cost structure to match demand [53] Question: Confidence in offsetting tariff impacts - Management expressed confidence in their ability to offset tariff costs through pricing and operational actions, although timing remains a challenge [54][55]