American Woodmark (US:AMWD)2020-05-27 00:29Financial Data and Key Metrics Changes - Net sales for the fourth fiscal quarter were $399 million, a decrease of 2% compared to the same period last year [25] - Adjusted net income was $22.5 million, or $1.33 per diluted share, down from $31.5 million, or $1.87 per diluted share in the previous year [25] - Adjusted EBITDA was $53.4 million, or 13.4% of net sales, compared to $63.8 million, or 15.7% of net sales for the same quarter last year [25][28] - Gross profit margin for the fourth quarter was 18.9%, down from 21.4% in the same quarter last year [28] Business Line Data and Key Metrics Changes - New construction sales increased by 4.6% year-over-year, while the remodel business revenue decreased by 5.8% [27] - Home center business was down 6.3%, and dealer/distributor business decreased by 4.2% [27][14] - Stock kitchen business performed well, comping double digits for the quarter despite operational disruptions [14] Market Data and Key Metrics Changes - The overall market activity in single-family homes was up 21% for the financial fourth quarter, but single-family completions were only up 3% [26] - Builders reported a decline in new starts, with variations by region, particularly focusing on first-time homebuyers and lower price point homes [10][11] Company Strategy and Development Direction - The company aims to leverage its builder and stock platforms while managing costs effectively during the pandemic [22][20] - There is a focus on digital transformation and improving customer experience to adapt to changing consumer preferences [66] - The acquisition of RSI is expected to enhance the company's product offerings in retail and new construction [20] Management's Comments on Operating Environment and Future Outlook - The management expressed uncertainty in forecasting due to the macroeconomic impact of COVID-19, with expectations of a 15% to 20% revenue decline in the first fiscal quarter [22][32] - There is optimism regarding the recovery of the housing market, particularly in the new construction segment, as inventory levels remain low [11][21] - The company is prepared to adapt quickly to changes in demand and market conditions [19] Other Important Information - Free cash flow totaled $136.8 million for the fiscal year, with $96 million in debt paid down [18][31] - The company faced challenges from tariffs, particleboard supply disruptions, and costs related to the temporary suspension of operations [28][31] Q&A Session All Questions and Answers Question: How should we think of the operational costs going forward? - Management indicated that tariffs will start to ease, and particleboard supply disruption costs are expected to reduce significantly [36] Question: How has industry pricing and promotional activity trended? - Pricing has remained stable, with no significant declines anticipated in the near term [38] Question: How has the professionally installed business trended? - The business has faced challenges due to homeowners' reluctance to allow contractors into their homes, impacting the R&R market [40] Question: Can you provide more granularity on the expected sales decline in Q1? - Management noted that new construction remains strong, but there is uncertainty regarding the timing of sales relative to housing starts [44][50] Question: What are the expectations for raw material costs in the year ahead? - Raw material costs are expected to remain stable, with some categories showing slight improvements [73] Question: Are there any labor availability issues within production? - The company has managed to maintain operations without significant labor shortages, as they were deemed essential and did not shut down [75]