Good afternoon, everybody. I'm Timothy Wojs. I cover building products here at Baird, and we're happy to have MasterBrand join us at our Global Industrial Conference this year. You know, just to level set everybody, MasterBrand is the old cabinet business, or the cabinet business that used to be a part of Fortune Brands. And they are the largest manufacturer of residential cabinetry in North America. And they've got, you know, kitchen, you know, line of kitchen, bathroom, and other parts of the home. So from the company, we have CEO Dave Banyard, we have CFO Andi Simon, and then Farand Pawlak is VP of IR and Communications over here. So maybe just start with a few prepared remarks, Dave, and then. Yeah, sure. We'll, we'll, you know, hop into Q&A. Yeah, just start by saying we're gonna make forward-looking statements, so we're covered by the Safe Harbor Act, which the verbiage is... of which is on the board here. I'll just start with an overview of who we are. You know, thanks for the intro there. MasterBrand is the largest, and in being the largest, we have the largest breadth of product portfolio. We cover pretty much everything from very basic stock cabinetry, all the way to highly customized kitchens and baths. And then we also have the most comprehensive channel. We cover pretty much every channel in the market, from direct to large builders, all the way down to very small customized shops that we serve through the variety of different channels that we have. We're also in home centers as well. Really, the heart of who we are, though, beyond the product and the channels that we serve, is really our business system, which we call the MasterBrand Way. It's based on fundamental tools that any of you can look up on the internet. Nothing magic about them, but the principles of lean, the principles of 80/20, and that's the culture that we have within the organization. I don't look at these tools as just tools. To me, this is the way you engage with all of your associates, and we have over 13,000 associates. It's a heavy manufacturing business in that regard. But we teach everybody in our organization how these tools work, and the idea behind that is that everybody in our company, any day of the week, should be able to make their job better, easier, and that translates, of course, into a more efficient business. There's a lot of complexity to that. I'm happy to answer any questions that you might have on that as we go forward, but that's really the essence of who we are today. And then, as we look forward, we think that using that mindset, that continuous improvement mindset, you can do a lot more with how we bring the value to our customers, and that's what we're working on now, and it's early stages for us on that. There are a lot of digital tools that are involved in that. That's what we're investing in right now. But we think that the match between those kinds of things really works well because you're really making something more efficient. And for those of you that have done a kitchen remodel, you know that that's not a very efficient process. It's a difficult process, and we aim to make that a better experience for all of our constituents, whether it be builders, all the way through an individual doing a kitchen remodel. Okay, very good. If you have any questions, you can email sessionfour@rwbaird.com, or you just raise your hand. Maybe just to start, can you just take us on, like, a 20-year journey of where MasterBrand has kinda come from? 'Cause I think it adds a lot of- Sure. You know, perspective of, you know, how the organization kinda got built, and then some of the things that you're starting to do internally to maybe improve a lot of the, you know, the operations of the company. Yeah, sure. Cabinets through history have been a very regional business, a very small business. It's a... From a capital standpoint, it's a fairly low barrier to entry. And so through the 1990s, you had a wide variety of very fragmented manufacturing base of cabinet manufacturers, very regional. And the part of the reason that it's regional is that it's a, when you're shipping the product to the consumer, you're shipping a lot of air. So you really have to have a factory fairly close by, or it becomes cost prohibitive to ship products. So you had all this landscape in North America, everything from stock to custom, scattered throughout North America. Late 1990s, early 2000s, Fortune Brands started acquiring cabinet companies and bringing them together. The first part of that strategy was really heavily oriented towards channel coverage and regional coverage, so it was product breadth, building out what I just described, essentially. So putting all these pieces together, and over time, I don't know exactly how many acquisitions Fortune did, and it was even back before it was called Fortune. But basically built up, I'd say, roughly 10 or more acquisitions that built this company to the size that it is today. So built by acquisition, roll-up, if you wanna call it that. I joined the company in 2019, and my observation, you know, the company really followed the market nicely as the market sort of steadily grew out of the great financial crisis. But then it sort of hit a bit of a stall point in terms of both its improved efficiency, which translates into margin, but also in its growth trajectory. So I came in in 2019. I don't have a background in building products. I consider myself more of a manufacturer, a bit more agnostic to the actual product you're making. And took a look at the business to try to understand, where could we take this, and what can you do with it? And what I observed is, it really wasn't integrated in a way that made it efficient. And so from that time forward, we spent a ton of time integrating ourself, both on the product side as well as on the factory side, to take what were effectively islands of capacity throughout the organization and bringing them together into more of a network, so that we can modulate our capacity and with whatever volume is coming at it, in a more unified way across a network of plants. There still is some regionality to it. We're not gonna make a cabinet in Oregon and ship it to Florida, but within the network that we have, which does span the entire continent of North America, we have the ability to move our capacity up and down within the factory network that we have because of the work that we've done, which is, again, based on some of the tools that I talked about already with 80/20 and lean. And then beyond that, there was a lot of subcultures within the company. As you can imagine, you acquire a bunch of companies, you're bringing together. If you don't have a unified business system that gets everybody to understand what you're trying to achieve, you're gonna have a different culture in Sioux Falls, South Dakota, than you do in North Carolina. Lots of expertise. Cabinets is a very complicated product to manufacture, so you do need that expertise, but you wanna balance that with a unified culture and set of tools, and that's, to me, lean is that. It's a way of engaging your associates with a common set of tools and ideals in how you do things, and we started that from day one. It's a journey. Anybody that's done a lean transformation knows it doesn't happen overnight. It's a grind. That's what I tell people when they start on the journey. They say: "Hey, we wanna put this on the wall and say we're lean. Give yourself three or four years and a lot of daily work to make that happen. Today, we see the associates in our factories coming forward and saying, "I wanna do a Kaizen event on this particular thing because this is what's holding me back from doing my job well." We let them do that, and we encourage them to do that, and we reward them for doing that, and that's the evolution we're on. Now, as we're at this stage, which again, Lean is a journey. You're never at the destination. We're gonna continue with that in whatever market we face. Our next phase here is, how do we stimulate growth in a way that's different from the rest of the market? And that's, that's what's to come, and it's gonna take some time, just like the Lean transformation took some time. Okay. Where are you in terms of just kind of the plant consolidation and the standardization of some of these chassis platforms and just how each, you know, individual plant is kinda operating? Yeah. 'Cause I think we had a conversation once, and you were... It's like, you know, kind of the similar line. You know, one part of the country makes the cabinets this way, the other parts of the country make it that way, and it just doesn't make a whole lot of sense when you think- Right ... about, you know, that. So just kinda where are you in that standardization process? Yeah, if you start at the, what I'll call the lower price point of the market, very standardized across. We have facilities that you could walk in, and the shape of the facility might be slightly different, the square footage might be slightly different. It looks very familiar, and you can see that across any of those plants. And as you work your way up, if you think about it, as you work your way up in price point, you're also working your way up in complexity. The more complex it is, the harder it is to standardize. Because you, you don't wanna take away complexity that the consumer feels that you're taking away their choice. So the part of the business that's still to be done is the very high end, the premium, ultra-custom, if you will, anything you want kinda business, because those things are harder to standardize. Plus, you have a more demanding consumer there that wants a wide variety of choices. What's interesting about the cabinet business is, I think if you interview or talk to people who have been in the cabinet industry forever, there's this sort of pride around the complexity. "Because we offer anything to anyone, we can do whatever you want." Ultimately, the consumer doesn't want complexity. They want choice, but they don't want complexity, and that's the conversation shift that we've had internally to say, "We can offer tons of choice without the complexity." The last piece of this is, you do this work, which is a core part of 80/20, and then lean fits in with it as well, it's a tool in our toolbox, you start pushing that complexity into smaller and smaller parts of the business. And so therefore, you don't need to have the complexity everywhere. You're still gonna have some complexity, but you isolate it to one place. You know, that job shop where somebody's making a very ornate scrollwork piece of work, you don't have to have that in every factory. You make them all in one spot, you get really good at it, you take those lean tools and really, you know, kinda go at even a job shop-type location, you kinda make that as best as it can be. Okay. You prevent the rest of the plants from getting bogged down by that complexity. Okay, okay. So if you think of the three parts of the market, you got kinda the stock business, the semi-custom business, and the custom business. What have you done in the semi-custom business to... 'Cause I, I've always thought in, that's the part of the market that it, you know, kind of, kinda gets a little crimped on the margin side, where you're trying to offer as much choice- Right ... but that complexity bogs you down, and you wind up not getting the right margin for that types of business. So have you, like- Yeah ... have you kind of tried to re-segment the offering to, you know, kinda move people up or down and kinda manage-? Right ... the complexity that way? I think the old way of thinking is thinking by product only. Yep. Ultimately, the channel and the type of customer you're dealing with is really the first. It should be where you start. So we've rethought about how we look at the market and say, "We're dealing with small dealer, designer. What kinds of products do they need to be successful?" That might be wildly different than what a home center needs to be successful. It's a different designer, a different consumer that's coming in there. So, you know, I'll give you a quick example. We have a designer in Los Angeles that makes one of the most beautiful designs I've ever seen. I mean, you go into her showroom, and it's. It feels like you're in the Ritz, and it's spectacular. She doesn't need a simplified cash-and-carry product. I'm not saying that we had that there before, but it's a, it's an extreme example of we tailor her product offering to, you know, meet her artistic needs. But that's gonna be a, you know, a million-dollar account a year. It's not gonna be a huge growth opportunity. But we tailor it that way, and we, we make sure we can serve that, but we only serve it out of one location, 'cause those customers are willing to pay for that distance. Flip that around, and you go into a, a much more retail, high-paced environment. How do we simplify what we're allowing them to sell so that the designer doesn't get bogged down? They have their playbook, and the customers that come in there know that, and they get the value that they're looking for. That's how you make money shifting consumers through. We have the products standardized enough that we can shift a consumer that might come in thinking, "I want all the bells and whistles," and then realizes how much the bells and whistles cost. We can shift them down and say, "You still get a great kitchen without all that stuff," and the same designer can do that. Okay, okay. Any questions from the audience? Over here, Scott. Just how long, how far along- ... Yeah, so it varies based on, again, back to the product breadth. I think in the higher end, we have a lot to go, because just making sure we don't take away something that's critical for that, there's a lot of analysis that goes into that, plus the production process is more complicated. I think in terms of our lean journey, we're in the middle innings, you know, sixth inning maybe, but I always like to say about lean, it's. There's always extra innings in lean. You're not ever there. You're never done. So we still have a wealth of opportunity, both in our inside supply chain as well as with our extended supply chain. 'Cause if you think about it, you take all these same principles to your suppliers, and we can walk into any of our suppliers' manufacturing facilities and say, "You're way inefficient. We're paying for all this inefficiency that you have." And we've done a lot of that work this year, and you're seeing some of that in our results. Beyond that, we also have scale now. When you commonize a lot of things, you can, you know, use that scale with supply base to, you know, find the best ones and really put more volume and help them grow. So there's still a lot of work to be done there. I'd say we're, you know, kind of getting on towards the fourth or fifth inning, but we're not, we're not done by any stretch. Have you tried to quantify the impact, the potential impact to your margins, or pass along some of the savings that are- You can use it then as needed, as a weapon for sure, in the commercial environment. But we've stated it, in an upmarket, we feel that we can improve our margins 100 basis points a year, and that's our stated goal. Okay. Right here. Sorry. Sort of two in one, I guess. What's the mix of R&R versus new build, and then sort of the state of demand on both sides? Sure. We're about a third single-family new construction, and I say it that way because we are not in multifamily new construction. So a third of our business is single-family new construction. The other two-thirds is repair and remodel, and repair and remodel channels are home centers, excuse me, home centers as well as dealers. And sorry, your other question was? Sure. State, yeah. By R&R. This year's been a bit of a surprise, I'll say. Single-family new construction has held up much better than I think any of us thought it would. And what that's showing us is that the underlying demand for housing is there. A pretty steep increase in interest rates that we are all aware of. I think the builders have done a wonderful job at managing that and using their balance sheet to help bring the cost down for the homeowner. And that's held up a lot better than we thought it would this year. I don't know what the absolute number is on an interest rate that discourages the kind of behavior we're seeing today, so in the absence of further increases in interest rate, I think that market is robust. There's a need for housing. Those builders that we service are delivering an outstanding product, and I think that that can continue. The repair and remodel market has been a bit more tepid this year, probably more than we thought it would, so they sort of have offset themselves in our portfolio. And I think there's a couple of reasons for that. First and foremost, we are a more expensive remodel project. That's always gonna be the case. Even on a lower-end kitchen, we cost more than a faucet. It's just the nature of the business. But I think this year in particular, there's two dynamics at work that are underlying the demand levels. First and foremost, I think consumers have money to spend, but they're targeting things that they haven't been able to spend money on in the same way. So European vacations were off the chart this year. For a lot of people, that's a once-in-a-lifetime expenditure that probably took money away from them doing a kitchen. So we look at that sort of consumer behavior and say the consumer's healthy. They're spending, but right now they're spending on some things that they've built up over time, over the last three or four years they haven't been able to spend on. We do know that there are a lot of people still taking out home equity accounts. They're not drawing on them. We do know that consumers are looking at kitchen remodel online. So we know that people are interested in it, but they haven't spent the money on it at the same level this year. I think the other factor that we've... Talking with our dealer networks and talking to consumers about is that during the COVID period, because of inflation and because of lead times and scarcity of tradespeople and so on and so forth, the decision process to do a project shrank. Typically, if you're gonna remodel a big part of your house, which the kitchen is, it's about a 12- 18month decision timeline. You go through all the exercises of trying to understand what you gotta do, the design process. People walk methodically through that over a long period of time. During 2021 and 2022, that timeline shrank because people saw inflation coming and said, "If I don't buy now, I'm gonna pay more. Plus, if even if I buy now, it's still gonna be 12 months before I get the thing done. So that shrank the consumer's decision time, and then at the start of this year, that timeline then extended back out to the normal 12-18 months. And so if you think about that, that's kind of an air pocket in order flow that we would experience because of that. So I think those two factors don't show up in the numbers, but they're there. Moving forward, I think the general economy is really gonna be the main driver for us. We know that long term, you know, and as we look at investments and how we plan, we're not looking at just the next six months, we're looking out three-five years. We know there's underlying demand there, and you're seeing that in new construction right now, that the fact that interest rates have gone up significantly over the last 12 months, and people are still buying new homes. That's good... That's an indicator to me that there's demand out there. We just have to get through whatever choppiness there is in the world today, that and the economy has to hold up. People have to feel like they have the wealth to do it. Yeah? You mentioned the concessions to try to consumer drive more sales. Are you seeing, or I guess, are the builders in turn demanding concessions from any of the suppliers? Are Are they- Yeah, of course. The way we handle that, and again, this is an advantage that we feel we have with our product portfolio, is builders will come to us asking for a price reduction. We shift them into a different product category that saves them even more than that, that price reduction. I look at it as: We'll help you value engineer the home, we'll save you more money than you'd get from what you're asking, and that, everybody wins in that case. And we like the margin on all of our products, and so we wanna solve their problem for sure, but we don't want it to be just a, you know, out of hide for anybody in the value chain. Maybe on that same point, I mean, how do you kinda think of the average per box pricing trend? You know, kinda, you know, where it's been and kinda where you think it's gonna be? 'Cause I think the industry has had some pressure, you know, as we've moved to maybe lower priced products, good margins- Mm-hmm. Still, but the dollar per box just winds up being kind of a headwind. Right. And that's the problem we have to solve as a company, is that we are seeing trade down, that effect that I just talked about, particularly in new construction. We think we have a great product and a great service offering in that category, so we're happy to move with them there, but fewer dollars are coming in. That's a fixed cost problem that we have to manage, and that's what we do. You know, we've said in our earnings releases, we are investing in the business for the future, but we have a funnel of ideas, and the line of where that funnel gets cut off has to move based on the dollars you have coming in at the gross margin line. So it's that just running a business, in my view. You factor that in as you look forward and to how much you can afford to invest. We do want to invest in our business. We think we have a lot of great ideas for how to stimulate growth in the future, but we'll temper that based on the environment that we're in. Okay. Maybe just on the, the market, what are you seeing around, like, just project trends? Like mix, size of projects, you know, those types of things. You know, feels like maybe the higher end is kinda holding up a little bit than the middle- True. I'm just kinda curious what you'd say. True from a product perspective. Yeah. What's interesting about, you know... I get asked questions about, "Well, would you consider going to Europe?" And the North American, or even more specifically, the United States, looks at the kitchen very differently than the rest of the world. So, you know, one of the questions I've gotten is: Are builders making... You know, they're making the houses smaller, so how does that affect you? They don't make the kitchen smaller. People still like their big kitchens. They eliminate other rooms or shrink other rooms before they address the kitchen. So if you think about... I mean, most of us probably do this, you spend a lot of time in your kitchen. It's sort of the gathering place of the home. A lot of people eat their meals 100% of the time in the kitchen. That requires space. I mean, the cooking shows are off the chart here these days, so people want that gourmet kitchen feel. You need space to do that. So we don't see a trend where kitchens are shrinking. If anything, they're getting bigger, or they have over the last several years. We see the trend where the homes are getting smaller, and they're just cutting other features, if you will. In terms of the types of projects we see, the high end has held up better, and I think that's an indicator. I mean, I think if you look at any product that has a luxury component to it, the luxury side has held up better. What people are doing that are in that middle part of the market are value engineering themselves out of-- and it's, in a lot of ways, it's de-featuring. It's, it's, I'll just-- I won't get a custom color. I'll just take the, the white that you have, you know? Right. Which is the predominant color, by the way? Right. You don't need to customize. Okay. Okay, good. So you talked about the next phase of kinda getting into, you know, kinda trying to, you know, you know, you know, focus more on growth and outgrowing the growth. Yeah. Like, what, what are some of the key initiatives that you've identified to, to kinda stimulate that demand? Yeah. Well, unfortunately, I have to talk about the foundation first. I wish I didn't, but if, as you can imagine, we came together through acquisition over years, and even if we hadn't, technology has changed. It's critical for us to grow the way we wanna grow, it's critical that we have data in a digestible way that is universal throughout our organization. And we've spent a lot of time over the past couple of years and continue to spend time on making sure our tech infrastructure is capable, both for getting the information that we want, but also for the kind of information that we might need in the future. So there's a lot of underlying investment. None of it's really exciting and sexy, and so you, but you have to do it. So there's an under layer of investment in that that we're doing. And it's—this isn't we're taking a big ERP system to put across the whole enterprise. That's not what I'm talking about. I'm talking about we have a wide variety of systems throughout the organization that can be completely eliminated if you integrate certain other parts of it. So that's really what I'm talking about there. On the other side of it, it's starting to connect further with our customers in a more digital way. We can do that also in our factories, which is part of this, but the factory part is more around efficiency. It's more around having information flow and decision-making happen more real time or instantaneously or in an automated way. But when you talk about the consumer and the customer, in this day and age, we all look at our phone to make a decision about a lot of different purchasing decisions. You typically don't do that in cabinets. You don't do that with a lot of building products. You look for an expert, you go talk and meet with the expert. There's a ton of inefficiency through all of that, and we think that there are ways for us, first and foremost, to connect with our channel better for information flow, 'cause there's a lot of inefficiency there, and then eventually extend that beyond. Okay. Right here. Just on pricing trends, you talked about mix, but just on a sort of SKU by SKU basis, I guess price must have been a nice tailwind in 2021, 2022. But how has that been trending when you think about pricing? Is there anybody sort of a longer-term effect, or do you ever get back some commodity costs maybe? Yeah. So price was a quarterly cadence, basically through the end of 2020 all the way through 2022. We have not raised price this year, but we had that quarterly year-over-year lift through 2023. Into the fourth quarter, we're now on par, so that tailwind is no longer there. We're at kind of par. We'll evaluate the market. We do it every quarter, so we're on that cadence, and we'll evaluate the market moving forward as to whether we need to increase price. In terms of commodity pressure, we do have some agreements, particularly with larger customers, to use index-based adjustments to commodity inputs. And obviously, as those indexes come down, that softens price there. Otherwise, it's you know, we've been fairly steady on price. What seems to be the status of imports on competition at the moment? Yeah. So, I'll give a little history if for the group here. About 15 years ago, Chinese cabinet companies came to the United States with a very innovative product, very nicely made, and quick ship. You could get a kitchen in a week. We missed that, and they took a lot of share. About four years ago, when I started, we basically, I mean, I kind of look at it as if, you know, if they have a great idea, go ahead and copy it. And we basically mimic the same operating model that the importers do, but ours don't, China has tariffs on that now because they were actually dumping, and so we, and we fought that. We led the charge on fighting that to level the playing field, not to eliminate the competition. It was a... I believe in things like that, but, you know, we weren't trying to be protectionist. We were just trying to level the playing field. Now that playing field's leveled, we have the same supply chain. We have a great manufacturing footprint. You still have to manufacture and assemble in the United States. They're just importing the materials, so they have to mimic what we have, and then we have a great channel, and we've been able to build that business. It's gonna do over $200 million this year, and we started that business four years ago. So we're very comfortable that we compete on a level playing field and have a great product, and it fits right into our product continuum. So again, if a consumer comes in saying, "Hey, I've really-- I like the..." They don't call them imports, but they, "I've seen, I've seen this brand," we can slide them right into that and design a great kitchen for them. Maybe just on your dealer base. I don't know if you have your statistics on this, but I mean, the dealer base is the biggest, you know, segment or channel for cabinets. You've got a leading position there. When you look across your dealer base, what's the opportunity to cross-sell a full line of MasterBrand as opposed... 'Cause if you go into, you know, a normal shop, you might have Mantra, and then you might have, you know, something above that that's not you. You might have something there, and then you might have... So what's the opportunity to really get all of your brands at the different price points at these dealers? I think there's a lot of opportunity there. It's a challenge because of the fragmentation and the... So what we've done is really try to break them apart, sort of talking about them opportunity-wise, that way. So there's going to be -- Like the one I described, this Los Angeles dealer, that she would never wanna have Mantra in her showroom. So you, that's part of 80/20, is you segment your customers in a way that, what's the package that's really gonna help them be successful? And our sales team is very focused on taking that value proposition into the select customers that they have, and also finding new ones, not just focusing on the ones we have, but how do we also offer that same thing to one that looks like the right target? We're in the process of doing that work. It's a road because you have 4,500 of them. Yeah, yeah, yeah. No, I agree. Doesn't happen overnight. Yep. Okay. And then just maybe lastly here, just capital allocation. You know, you guys did spin with that. Yep. I know it's been a challenging EBITDA year, but, how do you kinda-- Where are you kind of in the deleveraging process to kinda your targeted- Yep ...leveraging rates? And then once you kinda get there, what are the options kind of- Right ... available to you at that, at that juncture? Yeah, I think the team has done a phenomenal job this year with cash. It's part of our compensation. It's a big thing of what we talk about as a company. It's top of mind for us, and you can see that we've gotten after it this year. And so I think we're comfortable with the leverage we are. Whenever there's uncertainty, it's always better to be, to have less debt. We look at our world that way, and we're a cyclical business, so we understand that you have to be prepared for the cycle, and your balance sheet's the most important part of that. I don't like the interest rate right now, so that's also factors in, which, you know, five years ago, I didn't have to worry about that. It was basically free, and now it's not. So we like to take advantage of, you know, low interest goes to the banks. It doesn't... Well, not you, but other banks. And so it's like, you know, it's not for us, so I'd rather reduce that. But we have great ideas to invest in the business. That's our first priority. This year, we've prioritized de-leveraging, and we've done a great job of that. We've also bought back some shares. We have a modest share buyback approval. And then I think what's possible when you say... And I think we're in the position where we can do this. We have a good balance sheet, and if there are opportunities to go out and find other cabinet companies, like-minded companies that would fit with our portfolio, we'll do that. None of those are, I'd say, you know, massive capital outlays. They're, you know, all smaller. Good. So. We're out of time, so please, join me in thanking the MasterBrand team for being here. Thanks, Tim.