American Woodmark (AMWD) Q1 Earnings call transcript Aug 27, 2024
American Woodmark Corporation, a leading manufacturer and distributor of kitchen and bath cabinets, held its First Fiscal Quarter 2025 earnings call on August 27, 2024. The call, led by Paul Joachimczyk, Senior Vice President and Chief Financial Officer, along with CEO Scott Culbreth, provided insights into the company's financial performance and future outlook.
Performance and Outlook
The company reported net sales of $459.1 million, a decrease of 7.9% compared to the previous year. This decline was attributed to weaker demand in the summer and a slowdown in the remodel channel. The company's home center customers have noted higher interest rates and macroeconomic pressures leading to reduced spending on projects, particularly in higher-priced discretionary projects like kitchen and bath. However, the company remains focused on growing share and has recently won several stock kitchen and bath opportunities.
Despite the challenges, the company is optimistic about the future. With interest rates expected to decline, consumer confidence is expected to increase, leading to potential growth in existing home sales and home projects. This should serve as a tailwind for American Woodmark's business in calendar year 2025.
Financial Performance
The company's adjusted EBITDA results were $62.9 million or 13.7% of net sales, with reported EPS at $1.89. Operational excellence efforts continue to drive progress across the enterprise, but were offset by lower volumes and higher input costs in areas like logistics, raw materials, and labor. The company's cash balance was $89.3 million at the end of the first fiscal quarter, with access to an additional $322.9 million under its revolving credit facility. The company repurchased 271,000 shares in the quarter, representing about 1.8% of outstanding shares.
Strategic Initiatives
American Woodmark is focused on its strategy, which includes growth, digital transformation, and platform design. The company has made significant progress in digital transformation efforts, with ERP go-live and West Coast facility expansion plans for later this fiscal year. Platform design work continues at facilities in Monterrey, Mexico, and Hamlet, North Carolina. Mill equipment installation is ongoing, with automation efforts progressing in mill, component, and assembly operations.
Market and Industry Trends
The company expects the Repair & Remodel market to be down mid-single digits and new construction to be at mid-single digits for fiscal year 2025. However, larger discretionary projects in the remodel sector are projected to be down high single digits. This is due to the softer R&R demand and the recently reported slowdown in new construction single-family housing starts.
Challenges and Opportunities
The company faces challenges such as higher input costs and a softer Repair & Remodel market. However, it is also focusing on optimizing manufacturing and service platforms, evaluating pricing monthly, and investing in automation to mitigate inflationary impacts. The company remains steadfast in its GDP strategy and confident in the long-term investment opportunities within the housing market, including both new construction and the repair and remodel sectors.
In conclusion, American Woodmark Corporation's first fiscal quarter earnings call provided insights into the company's financial performance, strategic initiatives, and market trends. Despite facing challenges in the current market conditions, the company remains optimistic about the future and is focused on growth, digital transformation, and operational excellence.