American Woodmark (US:AMWD) Seeking Alphaยท2024-04-13 04:13Core Viewpoint - American Woodmark Corporation is positioned for potential upside despite recent revenue declines, supported by strong profitability metrics and a favorable market outlook [2][15]. Financial Performance - For the first nine months of the 2024 fiscal year, American Woodmark generated $1.39 billion in sales, a 12% decrease from $1.59 billion in the previous year [3]. - Remodeling sales dropped 13.8% year over year, with independent dealer and distributor channel sales down 10.3% and home center channel sales down 15.1% [3][4]. - Net income increased from $63.6 million to $89.4 million, driven by a rise in gross profit margin from 16.45% to 21.07% [4]. - Operating cash flow rose from $110.8 million to $187.4 million, while EBITDA grew from $175.1 million to $198.1 million [4][5]. Market Outlook - Management forecasts a low double-digit revenue decline for the 2024 fiscal year but expects EBITDA to be between $247 million and $253 million [6]. - The company aims to achieve over $350 million in EBITDA by 2028, capitalizing on a fragmented market and potential for acquisitions [11][15]. - The U.S. housing market is expected to recover, driven by years of underbuilding and increased repair and remodeling activities [4][6]. Competitive Positioning - American Woodmark has a market share of 15% in the new construction market, 24% in the home center market, and only 2% in the dealer market [13]. - The company is expanding its facilities to enhance production capacity and market reach, including recent expansions in North Carolina and Mexico [11][15]. - On a price to operating cash flow basis, American Woodmark is competitively priced compared to similar firms, with a valuation of 7.5 [7].