AMERICAN WOODMARK CORP Q1 FY2025 earnings call

• Net sales of $459.1 million, a 7.9% decline year-over-year due to weaker demand in the remodel channel.
• Adjusted EBITDA was $62.9 million, or 13.7% of net sales for the quarter.
• Strategy pillars include growth, digital transformation, and platform design.
• Summer launch was well received, distribution business conversion to 1951 is ongoing with new accounts being pursued.
• Digital transformation efforts include planning for ERP Go Live and a West Coast Made to Stock facility later in the fiscal year. Platform design work continues with mill equipment installation at Monterey, Mexico and Hamlet, North Carolina facilities ramping up, and automation efforts progressing in mill, component, and assembly operations.

Net sales for the first fiscal quarter were $459.1 million, representing a decline of 7.9% year-over-year. In terms of channels, new construction was up single-digits while repair remodel was down double-digits. Gross profit as a percent of net sales decreased 180 basis points to 20.2% versus the prior year, impacted by lower sales volumes and input cost pressures.

• Net sales are expected to be a low-single-digit decrease versus fiscal year 2024 due to softer repair and remodel market and larger discretionary remodel purchases decline.
• Adjusted EBITDA expectations are targeted in the range of $225 million to $245 million.
• Industry outlook for fiscal year '25: repair remodel market down mid-single-digits, new construction at mid-single-digits, and larger discretionary R&R projects projected to be down high-single-digits.

• Weaker demand in the remodel channel due to macroeconomic pressures such as higher interest rates and consumer confidence issues.
• Material constraints and labor impacts affecting input costs.
• Uncertainty in interest rate movements and their potential impact on consumer spending for home projects.

Q: Could you give color on how revenue trended by channel in the fiscal first quarter?

A: For new construction, we were up single-digits and for repair remodel down double-digits.

Q: How does the updated outlook for the year trend over the next three quarters?

A: We don't want to get into a quarterly forecast and projection outlook, rather confident in the full-year projection provided.

Q: Update on input costs and pricing?

A: Pricing actions are variable by channel, timing depends on the channel, and we had a price increase in the dealer channel.

Q: Outlook for new construction?

A: First quarter exceeded original planning expectations, but starts declined over the last 90 days, and interest rate cuts could drive demand mid-2025.

Q: Outlook for remodel?

A: Needs several rate cuts and has a lag effect before acceleration.

Q: Offsets for EBITDA margin guidance?

A: Pricing actions and operating efficiencies.

Q: Color on stock kitchen and bath awards?

A: Roughly $30 million net benefit, annualized, starting in the current quarter.

Q: Input cost inflation in EBITDA guidance?

A: Modeled in the outlook with pricing built in to offset.

Q: Color on share gains?

A: Teams are tracking as expected, having delivered wins so far.

Q: Capital deployment and repurchases?

A: Confident in the share repurchase program, no near-term change in trajectory.

Q: Pent-up demand and outdoor vs kitchen bath?

A: No structural demand reduction, indoor projects remain relevant.

Q: Lag time for share gains?

A: Varies by channel; new construction has a longer lag, home centers depend on store timelines.

Q: Color on M&A market?

A: No specific activity currently being pursued