• Net Sales: $397.6 million, a decline of 5.8% compared to the prior year.
• Adjusted EBITDA: $38.4 million, representing 9.7% of net sales.
• Reported EPS: $1.09 per share.
• Cash Balance: $43.5 million at the end of the third fiscal quarter.
• Leverage: 1.53 times adjusted EBITDA.
• Share Repurchase: 132,000 shares repurchased, approximately 1% of outstanding shares.
• Gross Profit Margin: Decreased 420 basis points to 15% from 19.2% last year.
• SG&A Expenses: 9.6% of net sales, down from 12.6% last year.
• Adjusted Net Income: $15.9 million or $1.05 per diluted share.
• Free Cash Flow: $31.5 million year-to-date, down from $131.7 million in the prior year.
• Net Sales Outlook: Expected mid-single digit decline for the full fiscal year.
• Adjusted EBITDA Outlook: Revised to a range of $210 million to $215 million for fiscal year 2025.

• Warning! GuruFocus has detected 3 Warning Sign with AMWD.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• American Woodmark Corp (NASDAQ:AMWD) reported adjusted EBITDA of $38.4 million, representing 9.7% of net sales.
• The company has a strong cash position with $43.5 million in cash and access to an additional $314.2 million under its revolving credit facility.
• American Woodmark Corp (NASDAQ:AMWD) repurchased 132,000 shares, approximately 1% of outstanding shares, during the quarter.
• The company is actively pursuing new accounts and launching new finishes and styles to stay on trend, which could drive future growth.
• Digital transformation efforts are ongoing, with an ERP go-live scheduled for May, which could enhance operational efficiency.

Negative Points

• Net sales declined by 5.8% compared to the prior year, driven by softer demand in the remodel market and a decline in new construction activities.
• Gross profit as a percentage of net sales decreased by 420 basis points to 15%, impacted by lower sales volumes and increased input costs.
• The company expects a mid-single-digit decline in net sales for the full fiscal year, indicating ongoing challenges in the market.
• Macroeconomic concerns such as consumer sentiment declines, inflation risk, and interest rate challenges are expected to persist.
• The closure of the Orange, Virginia manufacturing location indicates operational restructuring, which may have short-term impacts on production.

Q & A Highlights

Q: Can you discuss the impact of the slower repair and remodel (R&R) environment and builders reducing inventory on your guidance? A: Both factors were key contributors to the overall comp rate for the quarter. Our full-year outlook assumes a similar operating environment in Q4, with a mid-single-digit decline in net sales.

Q: Have you seen any positive impacts from recent hurricanes or fires in Southern California? A: We haven't seen specific impacts from the fires in Southern California, but in Florida, there were some positive comps in areas affected by hurricanes. However, these were not material to the overall quarter results.

Q: What pricing considerations are you contemplating in response to potential tariffs and cost increases? A: We are considering various options, including list price changes and surcharges, depending on the channel. The approach will depend on the market environment and whether the tariffs are long-term or short-term. We aim to avoid multiple price increases and prefer a single, comprehensive adjustment.

Q: Is there any indication that dealer demand is bottoming, or is the big-ticket R&R market still challenging? A: We believe we are bottoming out in the R&R demand, which affects both dealer and home center channels. We expect an increase off the floor, potentially in the second half of fiscal year 2025, as market conditions stabilize.

Q: Can you elaborate on the mixed headwinds in the new construction business and their impact? A: We are seeing a rotation down in product offerings, with builders opting for more affordable options to attract consumers. This includes smaller square footage homes and fewer cabinets per home, impacting our sales mix.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.