MasterBrand sales up, but lag behind other corporate divisions
MasterBrands Cabinets sales up

MasterBrands Cabinets sales up.

Jasper, IN—Despite a challenging year of Covid-related shutdowns, labor and material shortages, inflation concerns--and Hurricane Ida--MasterBrand Cabinets saw third quarter sales rise nine percent to $716.5 million, reaching $2.11 billion for the nine months ended Sept. 30. 

But MasterBrand, a unit of Fortune Brands Home & Security Inc. the sixth-largest company on the FDMC 300 list and North America's largest cabinetmaker, lagged behind other groups' results in the Furniture Brands portfolios. 

CFO Pat Hallinan added in an earnings conference call that overall third quarter sales for Fortune Brands reached nearly $2 billion dollars. Plumbing product sales, such as the Moen brand, increased approximately 26 percent, and operating income grew 40 percent.  Operating margin before charges and gains was 22.6 percent. The company’s Outdoors & Security brand, which includes MasterLock and ThermaTru Doors, saw sales increase by approximately 30 percent, driven by the addition of Larson Doors (acquired in November 2020) and organic growth of 6 percent.  Operating margin before charges and gains was 15.6 percent. For the MasterBrands cabinet division, sales increased by over 9 percent, driven by strong growth across all price points. Operating margin before charges and gains was 9.7 percent.

In the earnings call, Fortune Brands’ CEO Nicholas Fink said that, “Our teams produced very strong results in an extremely challenging environment. Demand remains strong across our portfolio and our investments in innovation, capacity, and digital transformation continue to accelerate the value proposition behind our world-class brands.”

Fink and company CFO David Hallinan both pointed to supply chain issues, including a delay in hardwood and resin shipments caused by Hurricane Ida, and labor availability.  

He added in the analyst call that overall company third quarter sales reached nearly $2 billion dollars. Plumbing products, such as the Moen brand, increased approximately 26 percent, and operating income grew 40 percent.  Doors and locks operations were up 30 percent in revenue and 20 percent in operating income, and the company’s Outdoors & Security sales increased approximately 30 percent, driven by the addition of Larson and organic growth of 6 percent.

Fink said that in terms of the cabinet business, consumer confidence was high and that was reflected in consumers investing in their homes by choosing high-end cabinet products. “Demand was equally strong on both stock and make-to-order with the strongest momentum continuing in our premium offerings,” said Fink.

Challenges for the cabinet division include inflation and labor, the Delta variant [of Covid], and the tight labor market.  In addition, cabinets are harder to build, requiring more labor especially as sales increased for the most customized versions. They continue to hire new labor, but “bringing new people on and getting them trained have brought some inefficiencies,” said Hallinan.

Fink agreed that labor shortages and freight availability remain the biggest challenges impacting performance in margins in the cabinets business. “Our teams are deploying lean methodologies and complexity reduction strategies to ease the supply chain and labor limitations. [And] significant order backlogs persist across the business and will be worked through 2022.“

Next year, the company leaders said that there will be additional challenges, with inflation being a main issue. This is true, especially in the first quarter of next year but will be a problem throughout the year.

Still, the company leaders appeared optimistic, especially considering that housing demand appears to be very strong and consumers appear ready to continue to upgrade their homes. 

Consumers continued to “spend up the price spectrum into premium offerings. We have seen this multi-quarter trend in both plumbing and cabinets,” Fink told analysts. “I’m also seeing this trend play out within our premium offerings in decking and doors.”

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Larry Adams | Editor

Larry Adams is a Chicago-based writer and editor who writes about how things get done. A former wire service and community newspaper reporter, Larry is an award-winning writer with more than three decades of experience. In addition to writing about woodworking, he has covered science, metrology, metalworking, industrial design, quality control, imaging, Swiss and micromanufacturing . He was previously a Tabbie Award winner for his coverage of nano-based coatings technology for the automotive industry. Larry volunteers for the historic preservation group, the Kalo Foundation/Ianelli Studios, and the science-based group, Chicago Council on Science and Technology (C2ST).