American Woodmark (US:AMWD)2024-08-27 14:10Financial Data and Key Metrics Changes - Net sales for the first fiscal quarter were $459.1 million, a decline of 7.9% year-over-year, attributed to weaker demand in the remodel channel [7][12] - Adjusted EBITDA was $62.9 million, or 13.7% of net sales, down from 15.1% the previous year [9][14] - Adjusted net income decreased to $29.6 million, or $1.89 per diluted share, compared to $46.2 million, or $2.78 per diluted share last year [14] - Gross profit margin decreased by 180 basis points to 20.2% from 22% year-over-year [12] - Free cash flow was $29.4 million year-to-date, down from $72.5 million in the prior year [14] Business Line Data and Key Metrics Changes - New construction sales were up single-digits, while repair and remodel sales were down double-digits [21] - The company expects larger discretionary projects in the remodel market to trend worse than the overall market, projected to decline by high-single-digits [10] Market Data and Key Metrics Changes - Year-over-year growth in single-family housing starts has slowed, impacting future cabinet installations [8] - The outlook for the repair and remodel market is expected to decline in mid-single digits, while new construction is anticipated to be flat [10][16] Company Strategy and Development Direction - The company’s strategy focuses on three main pillars: growth, digital transformation, and platform design [10] - Investments in automation and digital transformation are prioritized, with ongoing efforts in ERP and CRM systems [17] - The company aims to optimize manufacturing and service platforms while managing pricing to mitigate inflationary impacts [17] Management's Comments on Operating Environment and Future Outlook - Management noted that consumer confidence is expected to improve with potential interest rate cuts, which could drive demand in calendar 2025 [8][9] - The company remains confident in the long-term fundamentals of the housing industry despite current challenges [12] - Management described the current demand environment as a "beach ball being held underwater," indicating pent-up demand that could surface with improved economic conditions [43] Other Important Information - The company repurchased 271,000 shares during the quarter, representing about 1.8% of outstanding shares [9][15] - Net leverage was reported at 1.19 times adjusted EBITDA, compared to 1.09 times the previous year [15] Q&A Session Summary Question: Revenue trends by channel in the fiscal first quarter - New construction was up single-digits, while repair remodel was down double-digits [21] Question: Updated outlook for the year - Management refrained from providing quarterly forecasts but expressed confidence in the full-year projection [23] Question: Input costs and pricing strategies - Pricing actions vary by channel, with recent increases announced in the dealer channel [25] Question: New construction outlook amidst housing-start environment - Initial demand exceeded expectations, but concerns arose for the second half due to declining starts [29] Question: Share gains and financial benefits timing - Timing for realizing financial benefits from share gains varies, with new construction typically taking longer [51] Question: M&A market activity - No current M&A activities are being pursued [53]