Q2 2025 MasterBrand Inc Earnings Call & Business Update
It will also include Master brands second quarter 2025 earnings Conference call, which was previously scheduled for August six at 430 Eastern Standard time. In addition, American would Mark will provide commentary on select preliminary first quarter fiscal 2026 financial results.
Which were announced earlier today in connection with the proposed transaction.
During the Companys prepared remarks, all participants will be in a listen only mode. Following management's closing remarks colors are invited to participate in a question and answer session. Please note that this conference call is being recorded I will now.
Now pass the call over to Henry Harrison Senior director of F. E N E and Master brand, Sir the floor is yours.
Thank you and good morning with me on the call today are Dave Banyard, President and Chief Executive Officer, Brian Scott Culbreth, President and Chief Executive Officer of American, what Mark and Andy Sullivan, Executive Vice President and Chief Financial Officer, Greg.
That's great and American Wood market showed a joint press release earlier. This morning regarding our definitive agreement to combine in an all stock transaction.
<unk> issued a separate press release earlier this morning disclosing in second quarter 2025 financial results.
The joint press release, and Investor presentation that will be used on today's call are available on the investors section of each company's website at Macerich Green Dot Com and American would mark Dot com.
Domestic brand earnings Investor presentation is also available on the investors section of Master brands website at <unk> Dot com.
I would like to remind you that this call will include forward looking statements in either our prepared remarks or the associated question and answer session.
These forward looking statements are based on current expectations and market outlook and are subject to certain risks and uncertainties that may cause actual results to differ materially from those currently anticipated.
Information regarding these factors appears in the section entitled forward looking statements and the joint press release issued by Master brand and American would Mark earlier. This morning in his section entitled forward looking statements in the press release issued by mass brand early this morning, disclosing Master brands second quarter 2025 financial results.
More information about risks can be found in master brands filings with the Securities and Exchange Commission, including under the heading risk factors in Master brands full year, 2024 Form 10-K, and updated as necessary in subsequent 2025 form 10, Qs, which are or will be available one filed at SEC Gov, and our master brand Dot com.
And in American <unk> filings with the Securities and Exchange Commission, including under the heading risk factors in its fiscal 2025 Form 10-K, and updated as necessary and in subsequent fiscal 2026 form 10, Qs, which are or will be available once that American would mark dot com.
The forward looking statements in this call speak only as of today any of their master brand, nor American would mark undertakes any obligation to update or revise any of these statements except as required by law.
Today's discussion includes certain non-GAAP financial measures. Please refer to the reconciliation tables, which in the case of Master brand are in the press release issued early this morning, disclosing Master brands second quarter 2025 financial results, which is available at <unk> Dot com and in the case of American would mark on the joint press release issued by Master brand.
And American would Mark earlier, this morning, which is available at Master Green Dot Com and American Widmark Dot com.
Our prepared remarks today will include a discussion on the transaction for Master brand, President and CEO, Dave Banyard American would Mark President and CEO, Scott Cobra and mass ran executive Vice President and CFO and Simon.
As well as an overview of American <unk> select preliminary first quarter of fiscal 2026 financial results.
Followed by a discussion of Master brands second quarter 2025 financial results from Dave Banyard, and Annie Simon along with Master brands 2025 financial outlook.
Finally, Dave Banyard will make some closing remarks before we host a question and answer session with that let me turn the call over to Master brand, President and CEO, Dave Banyard.
Thanks, Andrea and good morning, everyone. We appreciate you joining us for today's call on short notice.
I'm very pleased to be here today, alongside the President and CEO of American would Mark Scott Cobra and Master brands CFO, Andy Simon to discuss Master brand and American remarks definitive agreement to combine in an all stock merger transaction that we believe will accelerate value delivery to customers associates and shareholders.
This all stock transaction is a transformative step forward for both companies and brings together two customer centric platforms to create the industry's most comprehensive portfolio of trusted cabinet brands and products across a broad price spectrum, delivering even better overall choice service and value to customers and consumers.
<unk>.
Master brand in America would Mark brings highly complementary strengths strong and broad portfolios of World class cabinet brands and products and streamline of low cost manufacturing profiles.
Importantly, both master branded American would Mark our long established American companies, but the vast majority of manufacturing operations based in the United States. A key differentiator, we believe will enable the combined entity to compete more effectively in today's complex and evolving market environment.
Through our combined strengths and resources, we are confident in our ability to unlock and deliver meaningful value speed agility and diligence.
With the industry's most comprehensive product and brand portfolio.
Our geographic reach enhanced support and marketing capabilities and greater operational flexibility. We believe the combined company will be well positioned to drive accelerated growth and innovation, while optimizing the customer and consumer experience.
Further we have strong complementary cultures, which are rooted in a shared commitment to customer focus and operational excellence.
This positions us well to deliver value.
We expect to realize following close approximately $90 million in run rate cost synergies by the end of year, three and for the transaction to be accretive to adjusted diluted earnings per share in year, two while generating significant cash flow.
Combining the resources of both Master brand and American would Mark is expected to enable increased investments in next generation automation to drive further efficiencies.
Advanced production innovation and provide an enhanced customer experience.
Before I turn it over to America, <unk>, President and CEO, Scott Culbreth, I'd like to give an overview of the transaction terms.
Under the terms of the agreement American with my shareholders will receive $5. One five shares of Master brand common stock for each share of American Woodbury common stock owned at the closing of the transaction.
Upon closing of the transaction, which we expect to occur in early 2026 subject to shareholder approvals and receipt of regulatory approval Master brand shareholders will own approximately 63% and American would mark shareholders will own approximately 37% of the combined company on a fully diluted basis.
Master brands Board will expand to 11 total directors with eight directors from the current Master brand Board and three directors from the current American would Mark Board following close.
I will serve as CEO and Master brand Nonexecutive, Chairman, David Petraeus will remain as chairman of the board for the combined company, which will be called Master brand.
The combined company will be headquartered in Beachwood, Ohio, and will maintain a significant presence in Winchester, Virginia.
With that I will turn it over to Scott.
Thanks, Dave and good morning.
Today is an exciting day for America with Marc and one that we believe will advance our mission of creating value through people.
We are pleased that America, woodmont shareholders will receive meaningful immediate value and benefit from substantial ownership in a stronger more diversified company with significant value creation potential.
Together with Master brand, we will unlock new opportunities to accelerate growth innovation and value creation for our customers our communities and our team members.
Our portfolio is aligned strategically spanning the full spectrum of customer needs.
Following close Master brand and we'll continue to offer our legacy brands the customers know and trust.
Overall through the added scale resources and operational agility created by this merger, we expect to become a stronger company positioned to grow faster than we would on a standalone basis.
American would mark has built a reputation for quality innovation and efficiency.
Driven by our steadfast commitment to the customer experience.
Core focus that we share with master brand.
I am confident that our shared approach will ensure we continue exceeding expectations and building lasting relationships.
As referenced in our joint transaction press release, we announced today select preliminary first quarter fiscal 2026 financial results.
Please refer to our guidance and the transaction release, we issued this morning accessible on our Investor Relations website.
Shortly Dave and Andy will speak to the current market conditions are.
Our belief remains that our products and platforms will allow us to capitalize on <unk> journey.
Generated in the industry when mortgage interest rates decline in consumer confidence new home construction and existing home sales increase.
Together with the proposed transaction with Master brand, we will enhance our ability to serve customers and deliver profitable growth and long term value for our shareholders.
We're excited about the future and what we can achieve together.
Now I'll turn it back to Dave to walk through the strategic benefits of the transaction.
Thanks, Scott as.
As I mentioned previously this combination brings together two customer centric platforms to create the cabinet industry's most comprehensive portfolio of trusted brands and products.
Customers and consumers are both master brand and American <unk> are expected to benefit from increased access to an expanded portfolio of world class brands, including stock semi custom and premium products across the full price spectrum.
Importantly, we remain committed to growing each company's legacy brands, which channel partners know and trust.
For Master brand. The addition of American Wood <unk> portfolio further enhances master brands existing portfolio and bearings Master brand closer to customers through a diversified channel mix and expanded geographical footprint.
We believe the addition of American <unk> semi custom brands offers an exciting opportunity for growth and expands master brands existing offering at this price point.
Offering customers increased optionality.
For American would Mark. The addition of premium semi custom and additional stock brands provides access to a broader and even more balanced channel mix that we believe will drive meaningful value creation and greater opportunities for our superior customer and consumer experience.
The enhanced diversity of the pro forma channel mix is anticipated to bring the combined company, even closer to more customers, providing direct access to more high growth markets and increased touch points for customer support with an enhanced service offering and offering customers greater access and flexibility to where and how they purchase.
With that I'll now turn it over to Master brand Executive Vice President and Chief Financial Officer, Andy Simon to walk through the combined company's financial profile.
Thanks, Dave and good morning.
We believe this transaction will accelerate value delivery for all shareholders and provide customers and consumers with unique and distinctive offering.
From a balance sheet perspective, we expect the combined company's pro forma net debt to adjusted EBITDA ratio at close to be below Master brand stayed at two times target leverage ratio.
This positions the combined company to maintain exceptional flexibility to continue to invest in our customers and our business as well as deliver even greater value to shareholders.
The combined company is expected to generate significant free cash flow.
On a trailing 12 months basis, we would drive approximately $639 million in pro forma adjusted EBITDA inclusive of anticipated run rate cost synergies of approximately $90 million by the end of year three following close.
While the transaction consideration is comprised solely of Master branch stock Master brand plans to a range of revolver expansion with its current banking group to refinance American Bud Marx debt following the close of the transaction.
Now turning to expected synergies.
As mentioned previously following close the combined company is expected to achieve run rate cost synergies of approximately $90 million by the end of year three.
These anticipated cost synergies are in addition to the savings initiatives already underway at both Master brand and American Widmark and the continued expected synergies from Master brands acquisition of Supreme last year.
These expected synergies are primarily driven by procurement and overhead optimization manufacturing network optimization and operational excellence through the implementation of best practices and technologies from both companies and we are confident in our ability to realize the significant value creation opportunities.
Additionally, following close.
<unk> <unk> executive Vice President corporate strategy and development net Leonard as Chief integration officer to lead the implementation of the integration plan under works.
In this critical role Matt will be responsible for carrying out the detailed planning and diligence completed by both companies and turning it into tangible results aligning teams processes and systems to realize the full value of these projected synergies and position the combined company for long term success.
I will now hand, it back to Dave to further highlight the strategic benefits of the transaction.
Thanks, Andy.
In addition to our shared customer centric cultures I want to emphasize our shared commitment and relentless focus on innovation to elevate the customer experience and fuel sustainable growth.
As Andy mentioned, the combined company is expected to generate significant cash flow to drive our capital allocation strategy.
Together, we see a powerful opportunity to invest across areas of our business to create a more agile foundation that we believe will enable us to further optimize operational efficiency advanced product innovation expand e-commerce capabilities enhanced both in person and digital engagement and elevate the customer experience.
Further our shared commitment to fostering mission driven cultures that drive innovation uplift customers empower partners and strengthen communities.
It's a powerful foundation for long term success.
We believe this alignment not only differentiates the combined company, but also enhances our ability to deliver lasting value.
Scott and his team have built a strong culture of deep customer relationships operational excellence and leading with integrity and every facet of the business and we're energized by the opportunity to bring together exceptional talent across Master brand and American with Mark and are confident in the impact we can make together.
With that I will now turn to Master brands second quarter 2025 financial results.
<unk> strong results for the second quarter of 2025 reflect our team's continued focus on disciplined execution operational consistency and resilience across our business.
Despite ongoing market softness in a challenging external backdrop, we remain committed to our strategic priorities and what we can control serving our customers with excellence managing cost effectively preserving margins and executing on our ongoing Supreme integration strategy.
This morning, I'll provide an overview of the market environment and key trends and Andy will walk through our financial results and outlook.
During the second quarter, the broader single family New construction market declined low single digits, driven by ongoing pressure on housing starts and completions.
Despite that backdrop, we outperformed the market with our builder direct sales up 5% year over year.
Our consistent service performance has helped us continue to gain share with both existing and new builders, despite elevated interest rates and persistent macroeconomic uncertainty.
Looking ahead, we continue to expect overall, new construction end market demand to be down mid single digits for the full year 2025. However, we believe our strong position operational discipline and trusted service model will allow us to continue delivering value in this evolving landscape.
Shifting to the repair and remodel market serviced by our dealer and retail customers. We saw continued choppiness in demand as end markets have been impacted by higher housing cost low existing home turnover and low consumer sentiment.
Our legacy repair and remodel business, excluding Supreme declined approximately mid single digits year over year, which was aligned with the broader market and our expectations.
Reduced consumer confidence led to softer traffic at our retail partners with impact most pronounced in stock cabinetry and across our e-commerce platforms.
We anticipate the end market softness to continue in repair and remodel throughout the remainder of the year as consumers continue to defer large discretionary purchases and the uncertain economic environment.
We continue to expect this market will be down high to mid single digits for the full year 2025 in line with our outlook for the market more broadly.
Against that backdrop, we are executing well on the integration of Supreme with the majority of our plant consolidation initiatives in North Carolina and nearing completion.
We remain aligned with our synergy realization timeline and expect these benefits to ramp meaningfully in the second half of 2025.
The integration of Supreme remains a major unlock for our business as we navigate the challenging market environment.
While 2025 remains defined by external complexity, it's equally a year of focused execution and opportunity.
We're doing what we said we would do managing costs advancing integration funding innovation and delivering for our customers.
With this said we are reaffirming our full year guidance are reflection of our confidence in the business and the momentum we're carrying into the back half.
Now with that let me turn the call over to Andy.
Thanks, Dave I'll begin with a review of our second quarter financial results, then provide context for our full year 2025 outlook.
Second quarter net sales were $739 million, an 8% increase compared to 676 $5 million in the same period last year.
Similar to what we saw in the first quarter, our topline growth was driven primarily by the continued contribution from the Supreme acquisition, which remains on track with our expectations.
We also benefited from the flow through of planned price improvements and share gains, particularly in the new construction market.
These gains were partially offset by overall softness across the markets, we serve and the corresponding volume decline.
Okay.
Gross profit was $239 7 million up three 8% compared to $231 million in the same period last year.
Gross profit margin was 32, 8% down 130 basis points from last year on improving by 220 basis points from the first quarter of this year.
This sequential improvement reflects expected seasonality.
Year over year decline was driven primarily by lower volumes and associated fixed cost leverage that.
That pressure was partially offset by contributions from Supreme our continuous improvement efforts net of inflation and higher net ASP.
Tariffs were a minor factor in the quarter and I'll touch more on our full year mitigation strategy in a moment.
SG&A expenses totaled $159 4 million up eight 7% compared to $146 $7 million in the same period last year.
This was primarily driven by the addition of Supreme SG&A expenses.
Net income was $37 $3 million in the second quarter compared to $45 $3 million in the same period last year the.
The year over year decline reflects the higher SG&A, just mentioned as well as increased amortization and restructuring costs. These were partially offset by lower interest and tax expenses.
Interest expense declined to $18 $9 million from $20 $6 million in the same period last year driven by the absence of onetime charges associated with the senior notes issued in June 2024 to fund the acquisition of Supreme.
Income tax was $11 $7 million or 23, 9% effective tax rate in the quarter, consistent with our expectations and compared to $14 8 million or a 24, 6% rate in the second quarter of 2024.
The slight decline in our effective rate was primarily driven by the mix of earnings across domestic jurisdictions.
Adjusted EBITDA was $105 4 million relatively flat compared to $105 $1 million in the same period last year.
Adjusted EBITDA margin came in at 14, 4%, reflecting a 110 basis point decline year over year, driven by the same volume related leverage challenges I referenced earlier.
However, these were offset in part by continuous improvement savings net of inflation contributions from Supreme and pricing actions.
Diluted earnings per share were <unk> 29 in the second quarter of 2025 based on $129 1 million diluted shares outstanding.
This compares to 35 in the second quarter of 2024, which was based on $130 7 million diluted shares outstanding.
Adjusted diluted earnings per share were <unk> 40 in the current quarter compared to <unk> 45 in the prior year period.
Turning to the balance sheet we.
We ended the quarter with $121 million of cash on hand, and $418 $6 million of liquidity available under our revolving credit facility.
Net debt at the end of the second quarter was $878 6 million, a $66 $1 million reduction sequentially.
<unk> and an improved net debt to adjusted EBITDA leverage ratio of two five times in line with our expectations.
We remain on track to achieve a sub two times leverage ratio by the end of the year.
Net cash provided by operating activities was $53 $4 million for the six months ended June 29, 2025% compared to $96 $1 million in the comparable period last year.
Second quarter cash generation improved significantly sequentially as several nonrecurring outflows from the first quarter did not repeat.
Capital expenditures for the six months ended June 29, 2025, or $27 9 million compared to $18 $3 million in the comparable period last year.
The increase reflects planned investments related to the integration of Supreme and our ongoing footprint realignment efforts.
These investments are aligned with our full year capital allocation plan.
Free cash flow was $25 $5 million for the six months ended June 29, 2025, compared to $77 $8 million in the comparable period last year.
This year over year decline was anticipated and consistent with our internal expectations.
We remain committed to our full year objective of generating free cash flow in excess of net income.
As we look to the back half of the year, we expect free cash flow to normalize supported by the absence of certain one time payments more typical seasonal patterns and growing benefits from our integration initiatives.
We continued share repurchases in the second quarter via a pre established <unk> one program.
During the 13 weeks ended June 29, 2025, we repurchased approximately 576000 shares of our common stock.
The shares were repurchased at a total cost of approximately $6 $7 million or an average of $11 69 per share.
Now turning to our outlook.
Our full year 2025 financial outlook includes only those tariffs currently in effect and is consistent with our previous outlook.
It does not reflect potential implications from proposed trade policy changes, we continue to monitor the dynamic tariff environment closely and are closely watching the potential reinstatement of section 232 tariffs on steel aluminum and lumber, which could take effect as early as August 15th.
Implemented we anticipate these could have a significant impact on cost and the overall impact on demand remains unknown at this time.
We believe it is prudent not to quantify that impact at this stage given the lack of clarity around scope timing and duration.
That said, we are continuing to prepare for a range of mitigation strategies, including targeted price increases supplier renegotiations and longer term shifts in sourcing and footprint.
As Dave mentioned Master brand is reaffirming its expectation that our addressable market in 2025 will be down high to mid single digits year over year with continued variability by end market.
We continue to expect our annual net sales to decline low single digits overall, including a mid single digit contribution from Supreme and organic net sales are still expected to be down mid single digits.
We are reaffirming our full year adjusted EBITDA guidance of $315 million to $365 million with a corresponding margin range of 12 to 13, 5%.
In addition, we are reiterating our previous expectations on interest expense effective tax rate and adjusted diluted earnings per share consistent with what we shared on our most recent quarterly earnings call.
Given the uncertainty around tariffs and in particular the potential impacts on demand, we believe maintaining a wider range remains prudent.
Please note this outlook does not reflect any anticipated financial benefits from the proposed merger with American Widmark, nor does it include expected transaction or integration related costs.
We are very excited about the announced merger between Master brand and American would mark by leveraging our respective strengths and harnessing the expected synergies between our businesses. We believe the combined company will be able to drive greater value for customers and shareholders now.
Now I would like to turn the call back to Dave.
Thanks, Andy.
We're executing well in what continues to be a challenging environment, our culture and associates dedicated use of our business system. The master brand way is proving to be effective.
Our Supreme integration initiatives are progressing on schedule and as a result, we delivered a strong second quarter.
We're taking proactive steps to manage tariff in sourcing risks and we are maintaining a balanced view of 2025.
Cautious in the near term with confidence in our long term trajectory.
Additionally, I want to reiterate our excitement about partnering with Scott and the American would mark team.
This transaction brings together two highly complementary businesses with strong customer centric cultures.
Attending our combined geographic reach enhancing our support and marketing capabilities and increasing our operational flexibility.
We anticipate that the proposed merger between Master brand in American Mubarak will position, the combined company to unlock and deliver meaningful value for our customers associates and shareholders.
Now with that I'll open the call up to Q&A.
Thank you the floor is now open for questions. If you do have a question you May press star one on your telephone keypad at this time. If your question has been answered you can remove yourself from the queue by pressing one again, ladies and gentlemen at star one.
Our first question comes from Garik Morris from Loop capital go ahead.
Oh, hi, Thanks, and congrats on the merger announcement I'm just wondering if you could just first off to start with.
The timing of the.
Transaction why now on clearly.
The markets are still pretty choppy so.
Curious as to the.
The decision came to come together at this point.
Good morning Gerrick. Thanks.
I think what we like about this transaction is it's a really compelling combination of two great U S companies with great value generating opportunities.
Lots of opportunity and value to generate for our customers with the expand product expanded product portfolio and our operational footprint.
We think bringing together makes it more efficient and delivers higher value to our customers plus coming together really fortifies, our financial profile, which which has a couple of benefits. One it allows us to really continue to invest in our business, but also bolsters us for.
Whatever financial or market dynamic, we're seeing out there.
Lastly, I think the.
The transaction and the combination really expands the opportunity for our associates and team members.
And we have very complementary cultures that we mentioned in our prepared remarks, I think you put all those things together and it makes it a good time to do this this transaction Scott did you have anything to add yes, just to add to those comments, Dave I think a three key stakeholder groups Gary specifically.
Quickly when I think about customers and consumers and what's going to allow us to do we're going to be able to better provide choice service value to that particular group I think about shareholders and <unk>.
Value creation that comes from our synergies and trained by Andy of the $90 million in year, three and then as Dave just mentioned with respect to our team members and associates growth opportunities as being part of a larger organization more resource.
And I think I'll add one last thing Eric is if you look at the presentation and I know it's.
Quick turn here, but I think we caught them at close we come out with a better balance sheet combined.
We're anticipating being below our stated goal of 2.0.
On a on a leverage ratio and so I think that prepares us well again like I said before whatever.
Market environment that we're in.
Okay.
Excellent.
On the cost synergies I was wondering if you can go into a little bit more detail.
Within the different.
Markets, where you see the most opportunities.
Yes, I think to start we did a very deep dive.
Joint Deep dive. We also brought in a third party independent resource to look at all of the opportunities. There. So we've done a very detailed analysis I think at this point in time, we're still.
As we presented in the presentation, it's about little over 40% G&A and indirect costs.
And then a little under 60% in Cogs Theres, a lot to be done there and so I think thats the level of detail, we're comfortable sharing right now.
Okay.
That's fair and then last question is just on <unk>.
The combined entity will have meaningful exposure.
Cross.
The different channels, and just wondering how youre thinking about concentration or even cannibalization.
Issues you might experience.
Both.
On the channel perspective.
Any thoughts to any regulatory hurdles that you move your body.
Yes.
Yes, I think I'd start by saying, we recognize it's a competitive environment out there we've got to earn our place every day and we do that individually today I think combined.
As I said earlier and Scott also focused on we think that bringing our two portfolios together really offer a lot of choice and value both to our channel partners as well as to consumers.
And I think that.
The other piece of that which I think is as important as the combined financial profile allows us to really invest in that customer and consumer experience and I think you put those things together.
I think you have a compelling story for how we can continue to go out and win with our existing customer base and so.
I think thats it.
Compelling story as it comes to the regulatory hurdles, we're very confident that we can get through that process. We have great advisers. We've analyzed this and I think we're ready to go on that front.
Just one additional comment I would add to that when you do look at the pro forma data of Carefulness, specifically I would tell you that I think it's a better diversification from a channel standpoint go forward as opposed to the two stand alone.
Okay.
Good I'll leave it there congrats before moving forward.
Okay.
Okay.
Thank you. Our next question comes from Mclaren Hayes from Zelman and Associates go ahead.
Hey, guys congratulations.
On the.
Cost synergies piece.
Any more detail that you can share on the phasing of that $90 million over the three year period.
Yes. Thanks for the question the class I think probably the best way to think about that is if you go back to how we phase the synergies with Supreme It's going to follow a similar path.
There are certain things that are easier and certain things that are harder and without going into too much detail because again I think it's premature to do that.
It will phase in a similar fashion to what you saw from Supreme So there'll be some early stage things that are easier to do that we'll get after right away.
Things like supply chain consolidation and so forth and then as you go further out there is there are other things that take a little bit longer and require.
In depth planning and thought before you make moves and so I think thats I wouldnt use that as a model of powder how to think about it.
Okay, Yeah, and I guess on Supreme relative to that $28 million three year target.
Can you quantify where you expect to be.
By the end of the year on that.
Yes, I think we're on track to where in a year or two here.
On track for those synergies and as we've highlighted in the past calls and I'll give you a little more detail on our North Carolina consolidation is largely complete we are making cabinets at run rate for <unk> for all the brands that we've moved around there which is quite an accomplishment because those are premium brands. So they are a bit more complicated.
And then your stock products for example.
And then the other consolidation that we're working on is really again phased in.
We expect that to be largely complete.
Certainly by this time next year, but probably a bit earlier than that so you should start seeing that run rate happen in the next 12 months.
18 months.
Okay great.
And then Dave I think you called out some pre buy activity.
On your last call I guess.
Could you quantify that in the quarter or.
Give us some detail on how how demand shaping up so far in the third quarter.
Yes.
Think the way I would frame it is.
We saw steady demand in Q2 in the single family New construction, although as we highlighted last quarter, we see the storm clouds. If you will on the horizon with starts and completions.
That carried a bit through July, but I think we're starting we're getting into that zone, where.
The completion rate coming down it starts to affect our single family New construction portion of our business.
So I think as you look at our.
Guidance looking forward, we're expecting that that market is going to be softer moving forward.
The team's done a great job in that category has really been out there pushing hard to continue to try to grow in the face of that but it's I think that gets challenging as the market slows a bit here.
Again, I think I would characterize the new construction market, it's not a devastating decline. It's I think it's a normalization to adjust for consumer demand and the fact that there are a large amount of Av.
Spec homes still available on the market. So that's how I would characterize that on the repair and remodel side I think it's been very similar for the past several quarters of this choppiness.
It's at a reduced level and I think you can see that in our results and then our projections. So I would say is there's no change in trajectory on R&R, It's just been.
It's just been down I don't know Scott if you want to add anything on what Youre seeing similar similar pattern R&R has been kind of bouncing at the bottom is the way we frame that has been consistent.
I would say new construction, a little worse than our most recent quarter than the prior quarter as we started to see some of the impacts of the very soft spring selling season in that space.
Got it I appreciate all the color.
Thank you again, ladies and gentlemen that star one to ask a question. Our next question comes from Trevor Allinson from Wolfe Research go ahead.
Hi, Good morning. Thank you for taking my questions you guys. Both have pretty notable presences in the home Center channel do you expect on a combined basis that youre going to see any difference in your exposure there versus what the pro forma combined would be and then a similar question on dealers versus builders.
Mass brand historically bigger presence with dealers.
Historically, a bigger presence with builders.
Any early reads on if there is a preference to change the combined exposure versus where the pro forma numbers would shake out to.
I think.
<unk> is what we like about this transactions, we think it actually brings more value to all of our customers and all of those channels.
We intend to bring these companies together with with a comprehensive portfolio and footprint to drive overall value for them.
I think where there is some interesting opportunity as our expanded dealer network is much more extensive than American would march they have some great products and we much like we did with Supreme we fully intend to introduce those products into our dealer network.
Theres a lot of similarity in that Theres very complimentary overlap there is not a huge amount of overlap between our dealer networks.
And Thats been I know thats been a focus for Scott and his team and.
Ive just got a much bigger sales force to go execute on that and existing relationships that we can go deliver I'll say that we did not in our deal modeling for either side didn't plan on these are not built into our model much like we did with Supreme but we still see we do we do see compelling opportunity there for growth to expand.
The products offered to our extensive dealer network.
Just adding onto that as well as maintaining and expanding our customer relationships is going to be a top priority as we work through this integration plan.
We are already actively engaging with our customers as early as the last hour to discuss the benefits of the company's coming together in our hands to offerings and service capabilities and our view as Dave just highlighted with the expanded portfolio and we're gonna be looking at cross selling opportunities for both companies.
Okay. Thanks for that makes a lot of sense and then second question you talked about the combination helping you compete better in today's environment. I think you mentioned again and uncertain environment from a demand perspective, I think maybe also you were alluding to an environment, where bigger tariffs or potentially in play. So can you just talk.
About how the combined organization will be better suited to compete in that environment.
Yes, I don't know that I think.
In general.
The tariff environment.
That will both managing well, but I think as we consolidate here we have the ability to.
Manage that in a joint way that I think will be more effective and I think thats.
So I would look at it Scott do you have any.
I agree with his remarks.
Yeah.
Okay. Thank you appreciate it and good luck moving forward.
Thank you.
Thank you and our next question comes from Steven Ramsey from Thompson Research go ahead.
Hi, good morning, and congrats on the deal wanted to start with the network optimization and the synergy benefits from their American would mark.
The two new facilities in hamlet Monterey.
Just to help the business as demand gets better I'm curious, how you think about the network as it is and putting the companies together and where the benefits come from.
Yes, thanks for the question.
I think the way we look at it is we have complementary.
Operational footprints.
There's a lot of work to do to really dial into the details, which we're not going to go into today, but I think what you do is you look at your customer footprint. The service levels that you provide to your customers and you optimize off of that I mean.
Any of these kind of decisions start with the customer and how you serve them and then you work back towards the combined factory footprint and to optimize around that I think thats the best way to think about it.
And thats the work to be done once we close.
Okay. That's helpful. It's similar type of question thinking about the brands.
These two really three companies. If you include Supreme how you think about potentially pruning brands and focusing to get any marketing spend optimization.
It's baked into the synergy or how youre thinking about it.
I think theres more to come there I don't think its I think we sort of see it as additive and a lot of ways. There may be some opportunity for that but as we started looking at this opportunity I think we're looking more at where we both have gaps and where we can fill that in.
The cabinet industry is interesting there's a lot of different brands out there and it's not a it's a trade brand not a consumer brand.
And I think that the trade brands have residents of the American would mark brands have strong residents with their channel partners ours do with ours I think there's more opportunity here to bring those additional brands than I'd say take away at this point.
Down the road business.
We're always looking at what's the most efficient way to serve our customers, but I think in the near term that's how we're approaching Scott to Germany.
We're both wanting to grew our legacy brands that would be the punch line takeaway from that standpoint of days earmarking down. The road you never know, but today, our focus will be grow those legacy brands are powerful in the marketplace today.
Okay. That's helpful and last quick one for me may have missed it but wanted to get the cost of achieving the synergies for America would Mark and then maybe just on a percentage basis, how it compares to the cost to achieve synergy within Supreme.
So the integration costs, they will build phase as well with some being upfront and then the ramping as we do some of the consolidations.
They will be from a.
Ratio perspective, it will be.
From a dollar perspective, similar but from a ratio perspective to the size of the company less and Thats because.
When you look at consolidations in some of the complexities of Supreme They were premium businesses. So those are much more difficult to combine with.
This is more on the value semi custom stock products. So I won't say, it's easy, but it's less difficult than what our premium consolidations.
Yes.
Okay. That's helpful. Thank you.
Thank you.
Last question comes from.
Tim Wallis from Bard go ahead Tim.
Hey, everybody.
Congrats on the acquisition and the deal here.
Maybe just.
First question, just if you could talk a little bit maybe about the process of the transaction and maybe how this.
Yes.
Deal has kind of come together on both sides and then if theres any sort of kind of breakup fee or anything like that.
On either side would be would be helpful.
Yes, Thanks, Tim.
Scott and I started talking about this earlier in the year.
Quickly came to the conclusion that there is a compelling value to be generated in combining two great companies.
And we started and we continue the conversations from there and did a lot of detailed work on both sides.
Good collaboration on understanding that value in them.
Figuring out how we would go about unlocking it.
Terms of the deal.
Specifics.
We're launching an 8-K, if it hasnt already been published that's got all the deal specifics and I direct you to that to look at any of them.
Barry.
Market based.
Transaction merger agreement, so I direct you to that to take a look at.
The specifics.
Okay. Okay.
Good and then.
I guess on a pro forma basis I mean.
A lot of acquisition activity I would say in the cabinet space over the last.
Five years to eight years, where where do you think like the combined entity would be from a from a market share perspective.
Once that once the deal closes in total.
Yes, I think.
Rather not comment on that Tim.
I think the.
We put some information in our presentation.
<unk> that talks about our channel coverage.
Combined entities product portfolio and I think that's a good way for you to direct you.
This entity will look like at close.
Okay, Okay sounds good congrats to everybody.
Thanks, Dave.
Thank you. This does conclude today's conference. We thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.