AMERICAN WOODMARK CORP Q3 FY2025 earnings call

• Net sales declined 5.8% due to softer demand in the remodel market and reduced new construction single-family activity. • Key product segment performance: home center made-to-order flat, stock kitchen up, stock bath/storage down; dealer flat, distribution down. • Adjusted EBITDA was $38.4 million, EPS was $1.09. • Strategy pillars: growth, digital transformation, platform design. Accomplishments include conversion of distribution business customers to 1951 Cabinetry, summer launches of new finishes, testing new collections in stock bath, ERP Go Live at West Coast facility, and plant closure in Orange, VA consolidated to other facilities.

Net sales for the third fiscal quarter were $397.6 million, a decline of 5.8% versus the prior year. The home center made-to-order business was roughly flat year-over-year, stock kitchen was up mid-single digits, but stock bath and storage had negative comps. The dealer business was roughly flat, while the distribution business was down double digits. New construction net sales were down 10.4%, repair and remodel down 2.3%, home centers down 0.6%, and independent dealer distributors down 6.8%. Adjusted EBITDA for the quarter was $38.4 million, or 9.7% of net sales.

• Net sales expected to be mid-single digit decline for fiscal year 2025. • Adjusted EBITDA range targeted at $210 million to $215 million. • Considering pricing actions to mitigate inflationary impacts on logistics, raw materials, labor, and potential tariff impacts. • Capital allocation priorities: invest in automation and digital efforts, use excess capital for share repurchases.

• Macroeconomic concerns: consumer sentiment declines, inflation risk growing, no near-term interest rate relief. • Tariffs: uncertainty regarding future policies, Mexico exposure (approximately 10% of revenue) if tariffs extended, potential pricing actions if tariffs remain in place for an extended period.

Q: Can you talk about what portion of the reduced guide is attributed to slower R&R environment and builders reducing inventory?

A: Both were key contributors, with the reduced guide being attributed to slower remodel market and builders reducing inventory.

Q: What are your pricing considerations and thoughts on dealer demand bottoming?

A: Pricing actions may be needed if tariffs can't be mitigated; dealer demand is hoped to be bottoming with expectation of stabilization.

Q: Can you quantify the mix headwinds in the new construction offering?

A: There's a rotation down in product offering from best to better and better to good, along with shrinkage in home square footage and downward trend in number of cabinets per home.

Q: What's the annual benefit from closing the Orange facility?

A: Annual benefit will be incorporated into fiscal year 2026 outlook, with details to be provided in future calls.