American Woodmark Corporation Announces First Quarter Results

Rhea-AI Summary

American Woodmark (NASDAQ: AMWD) reported its fiscal first quarter 2025 results. Net sales decreased 7.9% to $459.1 million, while net income fell to $29.6 million ($1.89 per diluted share) compared to $37.9 million ($2.28 per diluted share) last year. Adjusted EBITDA decreased 16.3% to $62.9 million, or 13.7% of net sales.

The company faced weaker demand in the remodel market and expects this trend to continue. Despite challenges, American Woodmark aims for share gains across all channels. For fiscal 2025, the company projects a low single-digit decline in net sales and Adjusted EBITDA between $225 million and $245 million.

Positive

• Net income of $29.6 million ($1.89 per diluted share)
• Adjusted EBITDA of $62.9 million, representing 13.7% of net sales
• Cash provided by operating activities of $40.8 million; free cash flow of $29.4 million
• Repurchased 271,460 shares for $24.0 million, approximately 1.8% of shares outstanding
• Strong liquidity with $89.3 million in cash and $322.9 million available under revolving credit facility

Negative

• Net sales decreased 7.9% to $459.1 million compared to the same quarter last fiscal year
• Net income decreased by $8.2 million compared to last fiscal year
• Adjusted EBITDA decreased by $12.3 million or 16.3% compared to last fiscal year
• Weaker than projected demand in the remodel market
• Recent slowdown observed in new construction single family starts
• Projected low single-digit decline in net sales for fiscal 2025

Insights

Financial Analyst

American Woodmark's Q1 FY2025 results reveal a mixed performance. Despite net sales growth in new construction, overall revenue declined 7.9% to $459.1 million, primarily due to weakness in the remodel market. Net income dropped to $29.6 million ($1.89 per diluted share), down from $37.9 million last year.

The company's Adjusted EBITDA of $62.9 million (13.7% of net sales) shows resilience in maintaining profitability despite challenging market conditions. However, the projected low single-digit decline in net sales for FY2025 suggests ongoing headwinds.

Positively, American Woodmark's strong cash flow ($40.8 million from operations) and share repurchases ($24 million) demonstrate financial stability and commitment to shareholder returns. The company's available liquidity of $412.2 million provides a solid buffer against market uncertainties.

Market Research Analyst

The Q1 results highlight diverging trends in the housing market. While new construction showed growth, the remodel market's weakness is concerning and expected to persist. This aligns with broader economic indicators suggesting a slowdown in housing activity due to higher interest rates and inflation pressures on consumer spending.

American Woodmark's strategy to target share gains across all channels is prudent, aiming to outperform market demand. However, the recent slowdown in new construction single-family starts could pose challenges. The company's performance relative to these market dynamics will be important to watch in coming quarters.

Investors should note the company's cautious outlook, with projected low single-digit sales decline for FY2025. This conservative stance reflects the uncertain macroeconomic environment but may also provide upside potential if conditions improve unexpectedly.

Fiscal First Quarter 2025 Financial Highlights:

• Net sales of $459.1 million
• Net income of $29.6 million
• GAAP EPS of $1.89
• Adjusted EBITDA of $62.9 million; 13.7% of net sales
• Cash provided by operating activities of $40.8 million; free cash flow of $29.4 million
• Repurchased 271,460 shares for $24.0 million

WINCHESTER, Va.--(BUSINESS WIRE)-- American Woodmark Corporation (NASDAQ: AMWD) (the "Company") today announced results for its first fiscal quarter ended July 31, 2024.

“Our team delivered net sales growth in the new construction market, but this was more than offset by weaker than projected demand in the remodel market,” said Scott Culbreth, President and CEO. “Softer demand in the remodel market is expected to continue and we have seen a recent slowdown in new construction single family starts. Despite these macroeconomic demand challenges, we continue to target share gains in all channels to ensure our performance exceeds market demand for the fiscal year.”

First Quarter Results

Net sales for the first quarter of fiscal 2025 decreased $39.1 million, or 7.9%, to $459.1 million compared with the same quarter last fiscal year. Net income was $29.6 million ($1.89 per diluted share and 6.5% of net sales) compared with $37.9 million ($2.28 per diluted share and 7.6% of net sales) last fiscal year. Net income decreased $8.2 million due to a decrease in net sales combined with an unfavorable mark-to-market adjustment on our foreign currency hedging instruments of $6.3 million, partially offset by the roll-off of acquisition-related intangible asset amortization of $11.4 million, which ended in the third quarter of the prior fiscal year, non-recurring pre-tax charge related to the plywood case last fiscal year of $4.9 million, and lower year-over-year incentive compensation. Adjusted EPS per diluted share was $1.89 for the first quarter of fiscal 2025 compared with $2.78 last fiscal year. Adjusted EBITDA for the first quarter of fiscal 2025 decreased $12.3 million, or 16.3%, to $62.9 million, or 13.7% of net sales, compared with $75.2 million, or 15.1% of net sales, last fiscal year.

Balance Sheet & Cash Flow

As of July 31, 2024, the Company had $89.3 million in cash plus access to $322.9 million of additional availability under its revolving credit facility. Also, as of July 31, 2024, the Company had $206.3 million in term loan debt and $163.8 million drawn on its revolving credit facility.

Cash provided by operating activities for the current fiscal quarter was $40.8 million and free cash flow totaled $29.4 million. The Company repurchased 271,460 shares, or approximately 1.8% of shares outstanding, for $24.0 million during the first quarter of fiscal 2025. As of July 31, 2024, $65.4 million of funds remained available from the amounts authorized by the Board to repurchase the Company's common stock.

Fiscal 2025 Financial Outlook

For fiscal 2025 (which includes the now completed first quarter) the Company expects:

• Low single-digit decline in net sales year-over-year
• Adjusted EBITDA in the range of $225 million to $245 million

“During the first fiscal quarter, we achieved an Adjusted EBITDA of $62.9 million, representing 13.7% of net sales. This outcome was influenced by the weaker sales in the repair and remodel market during the quarter. Despite this, our teams remain dedicated to optimizing our platform expansion investments and have continued making operational improvements, positioning us well for when macro housing conditions improve,” stated Paul Joachimczyk, Senior Vice President and Chief Financial Officer. “We remain committed to investing back in the business and continued returns to our shareholders by repurchasing 1.8% of our shares outstanding.”

Our Adjusted EBITDA outlook excludes the impact of certain income and expense items that management believes are not part of underlying operations. These items may include restructuring costs, interest expense, stock-based compensation expense, and certain tax items. Our management cannot estimate on a forward-looking basis the impact of these income and expense items on its reported net income, which could be significant, are difficult to predict, and may be highly variable. As a result, the Company does not provide a reconciliation to the closest corresponding GAAP financial measure for its Adjusted EBITDA outlook.

About American Woodmark

American Woodmark celebrates the creativity in all of us. With over 8,600 employees and more than a dozen brands, we’re one of the nation’s largest cabinet manufacturers. From inspiration to installation, we help people find their unique style and turn their home into a space for self-expression. By partnering with major home centers, builders, and independent dealers and distributors, we spark the imagination of homeowners and designers and bring their vision to life. Across our service and distribution centers, our corporate office, and manufacturing facilities, you’ll always find the same commitment to customer satisfaction, integrity, teamwork, and excellence. Visit americanwoodmark.com to learn more and start building something distinctly your own.

Use of Non-GAAP Financial Measures

We have presented certain financial measures in this press release which have not been prepared in accordance with U.S. generally accepted accounting principles (GAAP). Definitions of our non-GAAP financial measures and a reconciliation to the most directly comparable financial measure calculated in accordance with GAAP are provided below following the financial highlights under the heading "Non-GAAP Financial Measures."

Safe harbor statement under the Private Securities Litigation Reform Act of 1995: All forward-looking statements made by the Company involve material risks and uncertainties and are subject to change based on factors that may be beyond the Company's control. Accordingly, the Company's future performance and financial results may differ materially from those expressed or implied in any such forward-looking statements. Such factors include, but are not limited to, those described in the Company's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

AMERICAN WOODMARK CORPORATION
Unaudited Financial Highlights
(in thousands, except share data)
Operating Results
			Three Months Ended
			July 31,
			2024				2023
Net sales			$	459,128			$	498,255
Cost of sales & distribution				366,262				388,646
	Gross profit			92,866				109,609
Sales & marketing expense				24,337				24,360
General & administrative expense				21,502				35,594
Restructuring charges, net				—				(172	)
	Operating income			47,027				49,827
Interest expense, net				2,290				2,437
Other expense (income), net				5,240				(1,075	)
Income tax expense				9,864				10,615
	Net income		$	29,633			$	37,850
Earnings Per Share:
Weighted average shares outstanding - diluted				15,673,570				16,589,481
Net income per diluted share			$	1.89			$	2.28

Condensed Consolidated Balance Sheet
(Unaudited)
			July 31,				April 30,
			2024				2024
Cash & cash equivalents			$	89,265			$	87,398
Customer receivables, net				117,183				117,559
Inventories				177,119				159,101
Income taxes receivable				5,581				14,548
Prepaid expenses and other				26,074				24,104
	Total current assets			415,222				402,710
Property, plant and equipment, net				252,366				272,461
Operating lease right-of-use assets				141,751				126,383
Goodwill, net				767,612				767,612
Other long-term assets, net				46,472				24,699
	Total assets		$	1,623,423			$	1,593,865
Current maturities of long-term debt			$	2,704			$	2,722
Short-term lease liability - operating				30,685				27,409
Accounts payable & accrued expenses				175,967				165,595
	Total current liabilities			209,356				195,726
Long-term debt, less current maturities				372,175				371,761
Deferred income taxes				5,176				5,002
Long-term lease liability - operating				118,665				106,573
Other long-term liabilities				4,212				4,427
	Total liabilities			709,584				683,489
Stockholders' equity				913,839				910,376
	Total liabilities & stockholders' equity		$	1,623,423			$	1,593,865

Condensed Consolidated Statements of Cash Flows
(Unaudited)
			Three Months Ended
			July 31,
			2024				2023
Net cash provided by operating activities			$	40,811			$	86,721
Net cash used by investing activities				(11,394	)			(14,223	)
Net cash used by financing activities				(27,550	)			(24,580	)
Net increase in cash and cash equivalents				1,867				47,918
Cash and cash equivalents, beginning of period				87,398				41,732
Cash and cash equivalents, end of period			$	89,265			$	89,650

Non-GAAP Financial Measures

We have reported our financial results in accordance with U.S. generally accepted accounting principles (GAAP). In addition, we have discussed our financial results using the non-GAAP measures described below.

Management believes all of these non-GAAP financial measures provide an additional means of analyzing the current period's results against the corresponding prior period's results. However, these non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company's reported results prepared in accordance with GAAP. Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin

We use EBITDA, Adjusted EBITDA and Adjusted EBITDA margin in evaluating the performance of our business, and we use each in the preparation of our annual operating budgets and as indicators of business performance and profitability. We believe EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin allow us to readily view operating trends, perform analytical comparisons and identify strategies to improve operating performance.

We define EBITDA as net income (loss) adjusted to exclude (1) income tax expense (benefit), (2) interest expense, net, (3) depreciation and amortization expense, and (4) amortization of customer relationship intangibles. We define Adjusted EBITDA as EBITDA adjusted to exclude (1) expenses related to the acquisition of RSI Home Products, Inc. ("RSI acquisition") and the subsequent restructuring charges that the Company incurred related to the acquisition, (2) non-recurring restructuring charges, (3) net gain/loss on debt forgiveness, (4) stock-based compensation expense, (5) gain/loss on asset disposals, and (6) change in fair value of foreign exchange forward contracts. We believe Adjusted EBITDA, when presented in conjunction with comparable GAAP measures, is useful for investors because management uses Adjusted EBITDA in evaluating the performance of our business.

We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of net sales.

Adjusted EPS per diluted share

We use Adjusted EPS per diluted share in evaluating the performance of our business and profitability. Management believes that this measure provides useful information to investors by offering additional ways of viewing the Company's results by providing an indication of performance and profitability excluding the impact of unusual and/or non-cash items. We define Adjusted EPS per diluted share as diluted earnings per share excluding the per share impact of (1) expenses related to the RSI acquisition and the subsequent restructuring charges that the Company incurred related to the RSI acquisition, (2) non-recurring restructuring charges, (3) the amortization of customer relationship intangibles, (4) net gain/loss on debt forgiveness, and (5) the tax benefit of RSI acquisition expenses and subsequent restructuring charges, the net gain on debt forgiveness and modification, and the amortization of customer relationship intangibles. The amortization of intangible assets is driven by the RSI acquisition and will recur in future periods. Management has determined that excluding amortization of intangible assets from our definition of Adjusted EPS per diluted share will better help it evaluate the performance of our business and profitability.

Free cash flow

To better understand trends in our business, we believe that it is helpful to subtract amounts for capital expenditures consisting of cash payments for property, plant and equipment and cash payments for investments in displays from cash flows from continuing operations which is how we define free cash flow. Management believes this measure gives investors an additional perspective on cash flow from operating activities in excess of amounts required for reinvestment. It also provides a measure of our ability to repay our debt obligations.

Net leverage

Net leverage is a performance measure that we believe provides investors a more complete understanding of our leverage position and borrowing capacity after factoring in cash and cash equivalents that eventually could be used to repay outstanding debt.

We define net leverage as net debt (total debt less cash and cash equivalents) divided by the trailing 12 months Adjusted EBITDA.

A reconciliation of these non-GAAP financial measures and the most directly comparable measures calculated and presented in accordance with GAAP are set forth on the following tables:

Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin
		Three Months Ended
		July 31,
(in thousands)		2024				2023
Net income (GAAP)		$	29,633			$	37,850
Add back:
Income tax expense			9,864				10,615
Interest expense, net			2,290				2,437
Depreciation and amortization expense			12,802				11,745
Amortization of customer relationship intangibles			—				11,417
EBITDA (Non-GAAP)		$	54,589			$	74,064
Add back:
Acquisition and restructuring related expenses (1)			—				20
Non-recurring restructuring charges, net (2)			—				(172	)
Change in fair value of foreign exchange forward contracts (3)			5,309				(1,015	)
Stock-based compensation expense			2,941				2,247
Loss on asset disposal			58				7
Adjusted EBITDA (Non-GAAP)		$	62,897			$	75,151
Net Sales		$	459,128			$	498,255
Net income margin (GAAP)			6.5	%			7.6	%
Adjusted EBITDA margin (Non-GAAP)			13.7	%			15.1	%

(1) Acquisition and restructuring related expenses are comprised of expenses related to the RSI acquisition and the subsequent restructuring charges that the Company incurred related to the acquisition.
(2) Non-recurring restructuring charges are comprised of expenses incurred related to the nationwide reduction-in-force implemented in the third and fourth quarters of fiscal 2023.
(3) In the normal course of business the Company is subject to risk from adverse fluctuations in foreign exchange rates. The Company manages these risks through the use of foreign exchange forward contracts. The changes in the fair value of the forward contracts are recorded in other (income) expense, net in the operating results.

Reconciliation of Net Income to Adjusted Net Income
		Three Months Ended
		July 31,
(in thousands, except share data)		2024				2023
Net income (GAAP)		$	29,633			$	37,850
Add back:
Acquisition and restructuring related expenses			—				20
Non-recurring restructuring charges, net			—				(172	)
Amortization of customer relationship intangibles			—				11,417
Tax benefit of add backs			—				(2,940	)
Adjusted net income (Non-GAAP)		$	29,633			$	46,175
Weighted average diluted shares (GAAP)			15,673,570				16,589,481
EPS per diluted share (GAAP)		$	1.89			$	2.28
Adjusted EPS per diluted share (Non-GAAP)		$	1.89			$	2.78

Free Cash Flow
		Three Months Ended
		July 31,
		2024				2023
Net cash provided by operating activities		$	40,811			$	86,721
Less: Capital expenditures (1)			11,399				14,227
Free cash flow		$	29,412			$	72,494

(1) Capital expenditures consist of cash payments for property, plant and equipment and cash payments for investments in displays.

Net Leverage
		Twelve Months Ended
		July 31,
(in thousands)		2024
Net income (GAAP)		$	108,000
Add back:
Income tax expense			35,001
Interest expense, net			8,060
Depreciation and amortization expense			49,394
Amortization of customer relationship intangibles			19,027
EBITDA (Non-GAAP)		$	219,482
Add back:
Acquisition and restructuring related expenses (1)			27
Non-recurring restructuring charges, net (2)			(26	)
Change in fair value of foreign exchange forward contracts (3)			7,868
Stock-based compensation expense			11,375
Loss on asset disposal			1,793
Adjusted EBITDA (Non-GAAP)		$	240,519
		As of
		July 31,
		2024
Current maturities of long-term debt		$	2,704
Long-term debt, less current maturities			372,175
Total debt			374,879
Less: cash and cash equivalents			(89,265	)
Net debt		$	285,614
Net leverage (4)			1.19

(1) Acquisition and restructuring related expenses are comprised of expenses related to the RSI acquisition and the subsequent restructuring charges that the Company incurred related to the acquisition.
(2) Non-recurring restructuring charges are comprised of expenses incurred related to the nationwide reduction-in-force implemented in the third and fourth quarters of fiscal 2023.
(3) In the normal course of business the Company is subject to risk from adverse fluctuations in foreign exchange rates. The Company manages these risks through the use of foreign exchange forward contracts. The changes in the fair value of the forward contracts are recorded in other (income) expense, net in the operating results.
(4) Net debt divided by Adjusted EBITDA for the twelve months ended July 31, 2024.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240827922054/en/

Kevin Dunnigan

VP & Treasurer

540-665-9100

Source: American Woodmark Corporation

FAQ

What were American Woodmark's (AMWD) first quarter fiscal 2025 financial results?

American Woodmark reported net sales of $459.1 million, net income of $29.6 million, and adjusted EBITDA of $62.9 million for the first quarter of fiscal 2025.

How did American Woodmark's (AMWD) Q1 2025 results compare to the previous year?

Compared to the same quarter last year, net sales decreased 7.9%, net income fell from $37.9 million to $29.6 million, and adjusted EBITDA decreased 16.3% from $75.2 million to $62.9 million.

What is American Woodmark's (AMWD) financial outlook for fiscal 2025?

For fiscal 2025, American Woodmark expects a low single-digit decline in net sales year-over-year and adjusted EBITDA in the range of $225 million to $245 million.

How much stock did American Woodmark (AMWD) repurchase in Q1 2025?

American Woodmark repurchased 271,460 shares, approximately 1.8% of shares outstanding, for $24.0 million during the first quarter of fiscal 2025.