AMERICAN WOODMARK CORP Q4 FY2024 earnings call

• Net sales for the fourth quarter were $453.3 million, a 5.8% decline vs prior year, better than the range provided last quarter. New construction net sales declined 1.5% vs prior year with improving demand aligning with single-family housing starts growth. Remodel revenue declined 8.6% vs prior year, with home center down 10% and dealer distributor down 5% due to lower in-store traffic and smaller projects. - Adjusted EBITDA was $54.7 million or 12.1% for the quarter. Reported EPS was $1.69 and adjusted EPS was $1.70. Operational excellence efforts were offset by one - time costs from Monterrey and Hamlet facilities start - up. - Full year net sales were $1.8 billion, a 10.6% decline. Gross profit margin improved 310 basis points. Total operating expenses were 11.7% of net sales in fiscal year 2024. - Key strategic pillars: Growth - launched low SKU high - value offering to home centers, expanded dealer and distribution network program, launched new brand 1951 cabinetry. Digital transformation - launched CRM sales solution across all channels, went live on ERP cloud solution at Monterrey facility, planned next ERP implementation for West Coast facilities. Platform design - opened new facility in Monterrey, Mexico and expanded Hamlet, North Carolina facility, establishing component operation and Center of Excellence footprint.

In the fourth fiscal quarter of 2024, net sales were $453.3 million, a decline of 5.8% vs prior year. Within new construction, net sales declined 1.5% vs prior year. Remodel, including home center and independent dealer and distributor businesses, had revenue down 8.6% vs prior year, with home center down 10% and dealer distributor down 5%. Adjusted EBITDA for the quarter was $54.7 million or 12.1% of net sales. For the full year, net sales were $1.8 billion, a decrease of $219 million or 10.6%. Combined home center and independent dealer distributor net sales decreased 12.6% for the fiscal year, with home centers down 13.9% and dealer distributors down 9.1%. New construction net sales decreased 7.7% for the fiscal year. The company's gross profit margin for fiscal year was 20.4% of net sales vs 17.3% last year, a 310-basis point improvement. Adjusted EBITDA for fiscal year 2024 was $252.8 million or 13.7% of net sales, a 210-basis point improvement year-over-year.

• Fiscal year 2025 net sales expected to increase low single digits across all channels. - Adjusted EBITDA expectations range from $235 million to $255 million. - Long - term view: 5% to 6% CAGR in net sales and grow adjusted EBITDA to over $350 million by fiscal year 2028. - Capital allocation priorities for 2025: First, invest back in the business in digital transformation (ERP, CRM) and automation. Second, be opportunistic in share repurchasing. Third, deprioritize debt repayments due to current debt position.

• Market uncertainty day - to - day. - Impending election which may impact the economy, occurring in the middle of fiscal year. - Uncertainty regarding the utilization of incremental fixed costs from new capacity and ERP implementation in the short term.

Q: Can you help with the expected cadence of revenue guidance through the fourth quarters going forward?

A: We don't provide quarterly guidance, our focus is on the full - year outlook. We expect the second half to be stronger than the first half.

Q: Could you provide more color on the decrease in EBITDA margin despite low single - digit sales growth in the full - year guide?

A: It's due to investments in the future of the business like adding capacity on the East Coast, implementing ERP in West Coast operations, and investing in engineering resources for automation. These are seen as investments for long - term growth despite short - term margin impact.

Q: Any comment on pricing and promotion?

A: No real change in promotional activity and cadence in repair remodel year - over - year.

Q: Can you provide more on the expected wins in the stock category?

A: We added capacity on the East Coast for stock, bath and kitchen business. Our commercial teams are working to gain share and utilize the capacity, and we're being more aggressive in the marketplace now that we have the capacity.

Q: Talk about gross appetite for M&A?

A: Acquisitions are not a priority. We look at assets as they become available, but in a particular case mentioned, it didn't fit strategically due to product line and price point issues.

Q: Is ERP once live out West everything on one system after that?

A: This is the start from a manufacturing standpoint. It's a multiyear journey with first tackling finance and procurement, then moving into manufacturing footprint, and cycling through remaining operations.

Q: What are the benefits of ERP implementation?

A: Expect efficiencies in all aspects of the business, better reporting, better decision - making, potential margin improvement, labor efficiency, and cash flow working capital benefits in forecasting and SIOP.

Q: Thoughts on price and raw material costs in fiscal '25?

A: No real change from previous quarters, we'll have conversations with accounts on price if appropriate and in balance with inflation.

Q: Seen mix down in the space?

A: In new construction, we're seeing some mix down with builders moving from Timberlake to Origins and a shift in the good, better, best strategy. But not much in repair remodel.