MasterBrand, Inc. · NYSE:MBC
MasterBrand — Investor Day (December 2022)
59 slides from MasterBrand's investor day presentation, Dec 6, 2022
Slide 1: Investor Day 2022
Investor Day 2022 MasterBrand: Investor Day 2022
Slide 2: Forward Looking Statements
Forward Looking Statements Please note that the information included in this presentation contains statements relating to, among other things, future results, which are “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995, including estimates a
Slide 3: Building Great Experiences Together
Building Great Experiences Together Play Video MasterBrand: Investor Day 2022 3
Slide 4: Today’s Agenda
01 Introducing MasterBrand Dave Banyard, President and Chief Executive Officer 02 Fireside Chat: The MasterBrand Way Kurt Wanninger, EVP, Business Unit Leader Gay McMichael, EVP, Business Unit Leader Today’s Agenda 03 Digital & Technology Overview Navi Grewal, EVP, Digital & Technology 04 Financial
Slide 5: Introducing MasterBrand
01 Introducing MasterBrand MasterBrand: Investor Day 2022
Slide 6: Introducing MasterBrand
Introducing MasterBrand #1 North American residential cabinet manufacturer MasterBrand at a glance MasterBrand key financial metrics Net sales ($bn) $3.3 $3.3 billion $415 million $2.4 $2.5 $2.9 Net sales1 Adjusted EBITDA1,2 2019 2020 2021 2022E ~65% 4,500+ Net sales to R&R Dealer network Adjusted E
Slide 7: ~70-year History as the Market Leader in Cabinets
~70-year History as the Market Leader in Cabinets Jun 1954 Mar 1978 Mar 1988 Jun 1998 Dec 2002 Jun 2013 Dec 2015 Dec 2022 United Cabinet United Cabinet BCI acquired Schrock Cabinet Surpassed $1bn in WoodCrafters Surpassed $2bn in Anticipated Incorporated name changed to by American Co. acquired annu
Slide 8: Integration Across Complicated Product Set
Integration Across Complicated Product Set Face construction Cabinet box construction Finishes Face construction can be “framed” or Cabinets are made of particleboard, plywood, Cabinet finishes consist of laminates, foils, “frameless / full access” or MDF and can have variability in several areas st
Slide 9: Diverse and Agile Manufacturing Network
Diverse and Agile Manufacturing Network • 20+ manufacturing facilities, supported by our CA distribution and service centers, give MasterBrand full regional and cross-country coverage • Strategically positioned network allows faster speed to market and better service and support • Global supply chai
Slide 10: The MasterBrand Commitment
The MasterBrand Commitment Our Cultural Foundation for Doing the Right Thing for People and our Planet Environmental Social Governance • Leader in sustainable wood • Leader in associate safety • Comprehensive oversight sourcing practices ‒ Sustained OSHA recordable rate close to 1, ‒ >80% of our div
Slide 11: The MasterBrand Story
The MasterBrand Story OUR PURPOSE OUR VISION OUR CULTURE Building great experiences together Build on our rich history by innovating TEaM : Trust the tools, how we work and what we offer to Empower the team, delight our customers and Move forward How? Tools that enable us to: TODAY Industry Leader P
Slide 12: Seasoned Management Team Experienced in Business Transformation
Seasoned Management Team Experienced in Business Transformation • Strong manufacturing background • Advantaged mix of Dave Banyard Gay McMichael Kurt Wanninger Navi Grewal industry veterans President and Chief Executive Officer EVP, Business Unit Leader EVP, Business Unit Leader EVP, Digital & Techn
Slide 13: Achievable Long-Term Financial Targets
Achievable Long-Term Financial Targets Net Sales Operating Adj. EBITDA1 Margin Margin MasterBrand: MasterBrand: MasterBrand: 4-6% CAGR 14-16% 16-18% Market: 3-5% CAGR STRONG FOCUS ON MARGIN EXPANSION 1 Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP metrics.. Please see appendix for the defi
Slide 14: Why MasterBrand Wins Today
Industry leader with largest distribution network Why MasterBrand Unmatched product and brand portfolio Wins Today Operational excellence at scale MasterBrand: Investor Day 2022 14
Slide 15: Industry Leading Customer Base
Industry Leading Customer Base MasterBrand channel mix MasterBrand has leadership in dealer channel... Overview of primary sales channels 9% Dealer 10% Retailers / Home Dealer Channel Builder Channel Center Channel Retail: In Stock 55% Retail: Semi-Custom 2021 Channel Size $6.3bn $3.7bn $1.0bn 26% %
Slide 16: Multi-Branded Strategy Across Price Points and Products
Multi-Branded Strategy Across Price Points and Products MasterBrand offers the most MasterBrand portfolio by type and brand diverse product portfolio and covers the price spectrum Price point <$200 >$600 (per cabinet) 100% Stock /In-Stock Semi-Custom Custom/Premium ~15% 90% 80% 70% ~60% ~35% 60% 50%
Slide 17: Integrated Manufacturing Network & Strong Track Record of Continuous Improvement
Integrated Manufacturing Network & Strong Track Record of Continuous Improvement OLD MODEL: 10+ product platform / plant silos ✓ Footprint optimization ✓ Process improvement tools to + + + simplify product portfolio MANTRA brand sales grew 140% Assets Capabilities Product Specs CAGR from 2019 to 202
Slide 18: Proven Ability to Drive Profitable Growth
Proven Ability to Drive Profitable Growth Net sales ($bn) Adjusted EBITDA1 ($mm) $3.3 ~200 bps margin increase $2.9 from 2019 to 2022E $2.5 $415 $2.4 $318 $295 $255 2019 2020 2021 2022E 2019 2020 2021 2022E Adjusted 11% 12% 11% 13% EBITDA1 margin 1 Adjusted EBITDA and Adjusted EBITDA margin are non-
Slide 19: Industry Opportunity
Industry Opportunity MasterBrand: Investor Day 2022
Slide 20: Industry Landscape
Industry Landscape Manufacturers have consolidated Few large domestic competitors Import playing field is level Scale matters and few have it Dealer network remains fragmented eComm is an emerging channel MasterBrand: Investor Day 2022 20
Slide 21: Leading Market Position with More Room to Grow
Leading Market Position with More Room to Grow 2021 US residential cabinet market share overview MasterBrand has a leading position across products and remains focused on winning profitable business across the price spectrum 30% 2021 U.S. Cabinet Market ($bn) MasterBrand US Market $11bn MasterBrand
Slide 22: Favorable and Resilient Long-Term Housing Market Dynamics
Favorable and Resilient Long-Term Housing Market Dynamics STABILITY + GROWTH MasterBrand benefits from R&R stability while capturing upside from new construction activity. 35% R&R New Construction 65% Cumulative Median home Home equity has 2/3 of sales are tied to R&R We expect to grow at or above m
Slide 23: Kitchen is the Heart of the Home
Kitchen is the Heart of the Home CABINET UPGRADES DURING KITCHEN RENOVATIONS 6% 29% Do not replace or upgrade cabinets Replace all cabinets Partially replace 65% cabinets 95% of homeowners upgrade cabinets during kitchen renovations The kitchen is the “ultimate confluence of authentic and original d
Slide 24: Strategic Transformation Driving Growth & Profitability
Strategic Transformation Driving Growth & Profitability MasterBrand: Investor Day 2022
Slide 25: Driving Strategic Transformation to Deliver Accelerated Growth
Driving Strategic Transformation to Deliver Accelerated Growth THE MASTERBRAND WAY Our Journey Forward Where We Have Been • Strategic pricing • Volume focused • Diverse and agile manufacturing network • Fragmented, independent structure • Supply chain optimization • Higher cost supply chain • Data a
Slide 26: Why MasterBrand Wins Tomorrow
Align-to-Grow to deliver on the unique needs of each customer Why MasterBrand Lead through Lean to engage teams and foster Wins Tomorrow problem-solving Tech-enabled through digital, data and analytics MasterBrand: Investor Day 2022 26
Slide 27: Aligning Products, Services and the Network to Enable Value Delivery and Growth
Aligning Products, Services and the Network to Enable Value Delivery and Growth Segment Standard Product Network Targeted Construction Continuum Value Proposition REDUCING COMPLEXITY AND DRIVING GROWTH MasterBrand: Investor Day 2022 27
Slide 28: Aligning Business to Drive Growth
Aligning Business to Drive Growth Simplified manufacturing to fulfill market needs Reduced complexity enables improved services and quality FACILITY RATIONALIZATION 2 1 Facilities closed in the last 18 months Facility moved in the last 18 months Plant A Plant B Targeted manufacturing 57% Achieved Cl
Slide 29: Lead Through Lean
Lead Through Lean Two years into our journey, we’re progressing toward our vision of being a best place to work LEAN FOUNDATION TOOLS Continuous improvement now part of the culture 2024 - 2025 ASSOCIATE ENGAGEMENT Best Place to Work Lead Through Lean helped improve engagement score by 7% in 2022 vs
Slide 30: Ferdinand Kaizen Event
Ferdinand Kaizen Event Play Video MasterBrand: Investor Day 2022 30
Slide 31: Lead through Lean is Driving Significant Savings and Efficiency
Lead through Lean is Driving Significant Savings and Efficiency Since 2021 >$40M 367 375+ cumulative events recurring cost positions freed savings TRUST THE TOOLS, EMPOWER THE TEAM, MOVE FORWARD MasterBrand: Investor Day 2022 31
Slide 32: Leveraging Data and Analytics to Unlock Shareholder Value
Leveraging Data and Analytics to Unlock Shareholder Value Simplify and Digitize our Enhance Customer Automate Backoffice Plants Experience Processes MasterBrand: MasterBrand: Investor Day 2022 32
Slide 33: Why MasterBrand Wins
Why MasterBrand Wins Align-to-Grow to deliver Industry leader with largest on the unique needs of TOMORROW distribution network each customer TODAY Lead through Lean to Unmatched product and engage teams and foster brand portfolio problem-solving Operational excellence Tech-enabled through at scale
Slide 34: Break
Break () MASTERBRAND
Slide 35: The MasterBrand Way Fireside Chat
02 The MasterBrand Way Fireside Chat Kurt Wanninger Gay McMichael EVP, Business Unit Leader EVP, Business Unit Leader MasterBrand: Investor Day 2022
Slide 36: The MasterBrand Story
The MasterBrand Story OUR PURPOSE OUR VISION OUR CULTURE Building great experiences together Build on our rich history by innovating TEaM : Trust the tools, how we work and what we offer to Empower the team, delight our customers and Move forward How? Tools that enable us to… TODAY Industry Leader P
Slide 37: The MasterBrand Story
The MasterBrand Story OUR PURPOSE OUR VISION OUR CULTURE Building great experiences together Build on our rich history by innovating TEaM : Trust the tools, how we work and what we offer to Empower the team, delight our customers and Move forward How? Tools that enable us to… TODAY Industry Leader P
Slide 38: The MasterBrand Story
The MasterBrand Story OUR PURPOSE OUR VISION OUR CULTURE Building great experiences together Build on our rich history by innovating TEaM : Trust the tools, how we work and what we offer to Empower the team, delight our customers and Move forward How? Tools that enable us to… TODAY Industry Leader P
Slide 39: The MasterBrand Story
The MasterBrand Story OUR PURPOSE OUR VISION OUR CULTURE Building great experiences together Build on our rich history by innovating TEaM : Trust the tools, how we work and what we offer to Empower the team, delight our customers and Move forward How? Tools that enable us to… TODAY Industry Leader P
Slide 40: Digital & Technology Overview
03 Digital & Technology Overview Navi Grewal EVP, Digital & Technology MasterBrand: Investor Day 2022
Slide 41: Leveraging Data and Analytics to Unlock Shareholder Value
Leveraging Data and Analytics to Unlock Shareholder Value Simplify and Digitize our Enhance Customer Automate Backoffice Plants Experience Processes MasterBrand: MasterBrand: Investor Day 2022 38
Slide 42: Simplifying and Automating Back Office Processes
Simplifying and Automating Back Office Processes OLD MODEL: Lack of network flexibility, automation and data New Model: consistency from many redundant systems NEW MODEL STRENGTHENS OUR FOUNDATION: • “Data lake” architecture – Data governance – Expanding our data domains – Near real-time business in
Slide 43: Digitizing our Plants
Digitizing our Plants OLD MODEL: Dated technology with lower visibility New Model: into operational performance, paper- based systems NEW MODEL WITH EFFICIENT Eliminate Using RFID to track waste through Automated visual DIGITIZED PLANTS: cabinet parts across Digital displays analytics and inspection
Slide 44: Enhancing Customer Experience
Enhancing Customer Experience OLD MODEL: New Model: Complex and inefficient, stereotypical customer service experience with limited crossband Guided Selling coordination Self Service Clean Order & Product Capture Catalog NEW MODEL DELIGHTING CUSTOMERS: Intelligent Personalized eComm Ordering Marketi
Slide 45: Leveraging Data and Analytics to Unlock Shareholder Value
Leveraging Data and Analytics to Unlock Shareholder Value Simplify and Digitize our Enhance Customer Automate Backoffice Plants Experience Processes MasterBrand: MasterBrand: Investor Day 2022 42
Slide 46: Financial Overview & Outlook
04 Financial Overview & Outlook Andi Simon EVP and Chief Financial Officer MasterBrand: Investor Day 2022
Slide 47: The Evolution of The MasterBrand Story
The Evolution of The MasterBrand Story Pre-2000 2000-2018 2019-Now • Period defined by acquisitions • Focused acquisitions on industry • Strategic transformation to unify and ownership changes leaders with specialized products acquired companies and simplify • Developed widespread footprint, and cap
Slide 48: Strong Historical Financial Performance
Strong Historical Financial Performance Net sales ($bn) Adjusted EBITDA1 ($mm) and margin $3.3 $415 $2.9 $2.4 $2.5 $318 $295 $255 12% 13% 11% 11% 2019 2020 2021 2022E 2019 2020 2021 2022E Capital expenditures ($mm) $52 $54 $31 $27 2019 2020 2021 2022E 1 Adjusted EBITDA and Adjusted EBITDA margin are
Slide 49: Positioned to Drive Profitable Growth Over the Long-Term
Drivers to outperform market growth • Targeting most attractive areas for growth • Continuous improvement focused on service Positioned to and delivery Drive Profitable • Digital advances to enhance employee and customer experience Growth Over Operational Excellence accelerating margin the Long-Term
Slide 50: Resilient and Nimble Platform Positioned to Outperform in All Market Conditions
Resilient and Nimble Platform Positioned to Outperform in All Market Conditions 1. Foundation of Operational Excellence in Place • 80/20 principle driving reduced costs across business and plant floor • Achieved sustainable annual savings of $40M; further savings expected 2. Well Invested Capital Ba
Slide 51: Near-Term Expectations
Near-Term Expectations 2022E 2023E Market Growth MasterBrand • Expect market to be down high single digits, more pronounced in 1H 13-14% 12% - 14% Net Sales Growth • Full-year decremental margins to be ~25% North American Cabinets Market ~12% • Cash flow will be resilient from flex down Adj. Operati
Slide 52: Achievable Long-Term Financial Targets
Achievable Long-Term Financial Targets Clear path to Net Sales Operating Adj. EBITDA1 achieving results: Margin Margin 1. Business and portfolio aligned with the customer 2. Operational Excellence will fuel margin growth MasterBrand: MasterBrand: MasterBrand: 4-6% CAGR 14-16% 16-18% 3. Flexible plat
Slide 53: Capital Allocation Priorities
Capital Allocation Priorities 1 2 3 Re-Invest Maintain Healthy Longer-Term in Business Balance Sheet Considerations • Investments in high- • Improve capital efficiency with • Seek opportunities to return initiatives robust SIOP processes and aligned return capital to • Priorities include customer ve
Slide 54: The MasterBrand Story
The MasterBrand Story OUR PURPOSE OUR VISION OUR CULTURE Building great experiences together Build on our rich history by innovating TEaM : Trust the tools, how we work and what we offer to Empower the team, delight our customers and Move forward How? Tools that enable us to… TODAY Industry Leader P
Slide 55: MasterBrand
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Slide 56: Appendix
05 Appendix MasterBrand: Investor Day 2022
Slide 57: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2019 2020 2021 2022E Income before taxes (GAAP) 135.2 196.2 238.3 257.4 Interest income (0.1) (2.4) (4.6) (5.1) Depreciation 44.3 48.0 44.4 46.8 Amortization 17.8 17.8 17.8 17.6 Restructuring and other charges (a) 10.7 11.4 7.9 17.2 Asset impairment charges (b) 41.5 9.5 0.0
Slide 58: Non-GAAP Reconciliations
Non-GAAP Reconciliations 2022E Operating income (GAAP) 254.3 Restructuring and other charges (a) 17.2 Asset impairment charges (b) 26.0 Separation costs (d) 8.6 Parent company allocations (e) 75.0 Adjusted operating income (1) 381.1 Net Sales (GAAP) (2) 3,260.7 Adjusted operating income margin (1/2)
Slide 59: Non-GAAP Definitions
Non-GAAP Definitions Adjusted EBITDA, Adjusted EBITDA margin, Adjusted operating income and Adjusted operating income margin are non-GAAP measures. Management uses these measures to evaluate the returns generated by the Company. Management believes these measures provide investors with helpful suppl