American Woodmark Corporation Announces Third Quarter Results

Rhea-AI Summary

American Woodmark (NASDAQ: AMWD) reported Q3 fiscal 2025 results with net sales of $397.6 million, down 5.8% year-over-year. Net income decreased to $16.6 million (4.2% of net sales) with GAAP EPS of $1.09.

The company faced challenges due to softer demand in the remodel market and declining new construction activity. Key metrics include Adjusted EBITDA of $38.4 million (9.7% of net sales) and free cash flow of $1.4 million. The company repurchased 132,075 shares for $12.6 million during Q3.

Management announced the closure of its Orange, Virginia manufacturing facility, expecting to incur restructuring costs of $6.0-8.5 million. The company updated its fiscal 2025 outlook, projecting a mid-single-digit decline in net sales and Adjusted EBITDA between $210-215 million.

Positive

• Strong share repurchase program with 5% of shares bought back
• Healthy cash position with $43.5M in cash and $314.2M credit facility availability
• Generated $63.7M operating cash flow in first nine months

Negative

• Net sales declined 5.8% to $397.6M in Q3
• Net income dropped 22% to $16.6M
• Adjusted EBITDA margin decreased to 9.7% from 12.0%
• Plant closure with $6.0-8.5M restructuring costs
• Negative outlook with projected mid-single-digit sales decline

Insights

Financial Analyst

American Woodmark's Q3 FY2025 results reveal concerning operational trends amid persistent housing market weakness. The 5.8% revenue decline to $397.6 million coupled with a more severe 24% drop in Adjusted EBITDA to $38.4 million indicates significant margin compression (from 12.0% to 9.7%), suggesting the company is struggling to maintain profitability as volumes decrease.

The margin deterioration stems from multiple factors beyond just lower sales: manufacturing inefficiencies at newer facilities in North Carolina and Mexico, increasing supply chain costs, and apparent difficulty in offsetting these pressures through pricing or cost controls. This operational deleverage is particularly concerning as it's occurring despite management's previous restructuring efforts.

The company's decision to close its Orange, Virginia facility represents an acceleration of cost-cutting measures, with expected restructuring costs of $6.0-8.5 million. While necessary, this reactive approach suggests management may have been overly optimistic about a housing market recovery.

American Woodmark's balance sheet remains relatively healthy with $43.5 million in cash and $314.2 million in credit availability. However, the company's aggressive share repurchase program (5.0% of shares outstanding in nine months) raises questions about capital allocation priorities during an industry downturn. The $69.1 million spent on buybacks exceeds the $31.5 million in free cash flow generated, meaning the company is effectively leveraging its balance sheet for shareholder returns rather than preserving capital for operational improvements or potential prolonged market weakness.

Management's revised full-year outlook for a mid-single-digit sales decline and Adjusted EBITDA of $210-215 million implies continued challenges in Q4, with little expectation for near-term market improvement. The company's performance appears to be tracking with broader industry trends, but the significant margin compression suggests company-specific operational inefficiencies that may persist even when market conditions improve.

Fiscal Third Quarter 2025 Financial Highlights:

• Net sales of $397.6 million
• Net income of $16.6 million; 4.2% of net sales
• GAAP EPS of $1.09; adjusted EPS of $1.05
• Adjusted EBITDA of $38.4 million; 9.7% of net sales
• Cash provided by operating activities of $11.0 million; free cash flow of $1.4 million
• Repurchased 132,075 shares for $12.6 million

Fiscal 2025 First Nine Months Financial Highlights:

• Net sales of $1,309.2 million
• Net income of $73.9 million; 5.6% of net sales
• GAAP EPS of $4.79; adjusted EPS of $5.28
• Adjusted EBITDA of $161.5 million; 12.3% of net sales
• Cash provided by operating activities of $63.7 million; free cash flow of $31.5 million
• Repurchased 752,412 shares for $69.1 million

WINCHESTER, Va.--(BUSINESS WIRE)-- American Woodmark Corporation (NASDAQ: AMWD) (the "Company") today announced results for its third fiscal quarter ended January 31, 2025.

“Despite performance that was below our expectations for the quarter, our teams continue to execute and have built a platform to deliver profitable growth when macroeconomic conditions improve. The quarter was impacted by softer demand in the remodel market and a decline in new construction single family activity as inventories were reduced,” said Scott Culbreth, President and CEO. “Demand trends are expected to remain challenging, and our outlook is for a mid-single digit decline in net sales for the full fiscal year and an Adjusted EBITDA range of $210 million to $215 million.”

Third Quarter Results

Net sales for the third quarter of fiscal 2025 decreased $24.5 million, or 5.8%, to $397.6 million compared with the same quarter last fiscal year. Net income was $16.6 million ($1.09 per diluted share and 4.2% of net sales) compared with $21.2 million ($1.32 per diluted share and 5.0% of net sales) last fiscal year. Net income decreased $4.7 million due to lower net sales, increasing supply chain costs, and restructuring charges totaling $0.5 million related to a reduction in force implemented during the second quarter and the closure of the manufacturing facility located in Orange, Virginia, which was announced in January 2025, partially offset by the roll-off of acquisition-related intangible asset amortization and lower year-over-year incentive compensation. Adjusted EPS per diluted share was $1.05 for the third quarter of fiscal 2025 compared with $1.56¹ last fiscal year. Adjusted EBITDA for the third quarter of fiscal 2025 decreased $12.2 million, or 24.0%, to $38.4 million, or 9.7% of net sales, compared with $50.6 million, or 12.0% of net sales, last fiscal year.

During January 2025, the Company's Board approved the closure and eventual disposal of its manufacturing plant located in Orange, Virginia. The Company expects to incur total pre-tax restructuring costs of $6.0 million to $8.5 million related to the closing of the plant. The restructuring costs consist of employee severance and separation costs of approximately $2.0 million to $2.5 million, and charges for relocation and disposal of property and equipment and other administrative costs of approximately $4.0 million to $6.0 million. The Company expects to recognize substantially all of these costs during fiscal 2025.

First Nine Months of Fiscal 2025 Results

Net sales for the first nine months of fiscal 2025 decreased $85.0 million, or 6.1%, to $1,309.2 million compared with the same period of the prior fiscal year. Net income was $73.9 million ($4.79 per diluted share and 5.6% of net sales) compared with $89.4 million ($5.46 per diluted share and 6.4% of net sales) in the same period of the prior fiscal year. Net income for the first nine months of fiscal 2025 decreased $15.5 million due to lower net sales, manufacturing volume deleverage in our new locations in Hamlet, North Carolina, and Monterrey, Mexico, increasing supply chain costs, unfavorable mark-to-market adjustment on our foreign currency hedging instruments, and restructuring charges totaling $1.7 million related to a reduction in force implemented during the second quarter and the closure of the manufacturing facility located in Orange, Virginia, which was announced in January 2025, partially offset by the roll-off of acquisition-related intangible asset amortization, which ended in the third quarter of the prior fiscal year, non-recurring pre-tax charge related to the plywood case last fiscal year, and lower year-over-year incentive compensation. Adjusted EPS per diluted share was $5.28 for the first nine months of fiscal 2025 compared with $6.81¹ in the same period of the prior fiscal year. Adjusted EBITDA for the first nine months of fiscal 2025 decreased $36.6 million, or 18.5%, to $161.5 million, or 12.3% of net sales, compared to $198.1 million, or 14.2% of net sales, for the same period of the prior fiscal year.

1During the second quarter of fiscal 2025, the Company changed its definition of Adjusted EPS per diluted share to exclude the change in fair value of foreign exchange forward contracts to be consistent with its definition of Adjusted EBITDA. Prior period amounts have been adjusted to conform to current period presentation.

Balance Sheet & Cash Flow

As of January 31, 2025, the Company had $43.5 million in cash plus access to $314.2 million of additional availability under its revolving credit facility. Also, as of January 31, 2025, the Company had $198.8 million in term loan debt and $173.4 million drawn on its revolving credit facility.

Cash provided by operating activities for the first nine months of fiscal 2025 was $63.7 million and free cash flow totaled $31.5 million.

The Company repurchased 132,075 shares, or approximately 1.0% of shares outstanding, for $12.6 million during the third quarter of fiscal 2025, and 752,412 shares, or approximately 5.0% of shares outstanding, for $69.1 million during the first nine months of fiscal 2025. As of January 31, 2025, $145.4 million remained available from the amount authorized by the Board to repurchase the Company's common stock.

Fiscal 2025 Financial Outlook

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

• Mid single-digit decline in net sales year-over-year
• Adjusted EBITDA in the range of $210 million to $215 million

“The Company has delivered resilient performance during this period of declining volumes and macroeconomic headwinds. Our team has laid a solid foundation in all our functions that will position the company for profitable growth once our volumes return,” stated Paul Joachimczyk, Senior Vice President and Chief Financial Officer. “We have been, and continue to remain, committed to our capital investment strategy for the company and will continue driving returns for our shareholders as shown by repurchasing 5.0% of our shares outstanding during the first nine months of fiscal 2025.”

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								Nine Months Ended
		January 31,								January 31,
			2025				2024			2025					2024
Net sales		$	397,580			$	422,102			$	1,309,190			$	1,394,224
Cost of sales & distribution			337,816				341,162				1,070,849				1,100,516
Gross profit			59,764				80,940				238,341				293,708
Sales & marketing expense			19,537				21,945				65,612				68,990
General & administrative expense			18,632				31,116				60,371				101,746
Restructuring charges, net			520				—				1,653				(198	)
Operating income			21,075				27,879				110,705				123,170
Interest expense, net			2,816				1,932				7,554				6,322
Other expense (income), net			(1,457	)			(2,498	)			8,485				(523	)
Income tax expense			3,145				7,218				20,776				27,953
Net income		$	16,571			$	21,227			$	73,890			$	89,418
Earnings Per Share:
Weighted average shares outstanding - diluted			15,159,442				16,124,198				15,430,164				16,380,756
Net income per diluted share		$	1.09			$	1.32			$	4.79			$	5.46

Condensed Consolidated Balance Sheet
(Unaudited)
		January 31,				April 30,
		2025				2024
Cash & cash equivalents		$	43,484			$	87,398
Customer receivables, net			112,759				117,559
Inventories			179,138				159,101
Income taxes receivable			18,056				14,548
Prepaid expenses and other			26,283				24,104
Total current assets			379,720				402,710
Property, plant and equipment, net			249,660				272,461
Operating lease right-of-use assets			135,683				126,383
Goodwill, net			767,612				767,612
Other long-term assets, net			57,561				24,699
Total assets		$	1,590,236			$	1,593,865
Current maturities of long-term debt		$	8,067			$	2,722
Short-term lease liability - operating			33,802				27,409
Accounts payable & accrued expenses			147,452				165,595
Total current liabilities			189,321				195,726
Long-term debt, less current maturities			367,277				371,761
Deferred income taxes			—				5,002
Long-term lease liability - operating			109,552				106,573
Other long-term liabilities			4,522				4,427
Total liabilities			670,672				683,489
Stockholders' equity			919,564				910,376
Total liabilities & stockholders' equity		$	1,590,236			$	1,593,865

Condensed Consolidated Statements of Cash Flows
(Unaudited)
		Nine Months Ended
		January 31,
			2025				2024
Net cash provided by operating activities		$	63,687			$	187,433
Net cash used by investing activities			(32,192	)			(55,713	)
Net cash used by financing activities			(75,409	)			(75,623	)
Net (decrease) increase in cash and cash equivalents			(43,914	)			56,097
Cash and cash equivalents, beginning of period			87,398				41,732
Cash and cash equivalents, end of period		$	43,484			$	97,829

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. Additionally, Adjusted EBITDA is a key measurement used in our Term Loans to determine interest rates and financial covenant compliance.

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"), (2) restructuring charges, net, (3) net gain/loss on debt modification, (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, (2) restructuring charges, net, (3) the amortization of customer relationship intangibles, (4) net gain/loss on debt modification, (5) change in fair value of foreign exchange forward contracts, and (6) the tax benefit of RSI acquisition expenses, restructuring charges, the net gain/loss on debt modification, the amortization of customer relationship intangibles, and the change in fair value of foreign exchange forward contracts. The amortization of intangible assets is driven by the RSI acquisition. Management has determined that excluding amortization of intangible assets and change in fair value of foreign exchange forward contracts from our definition of Adjusted EPS per diluted share will better help it evaluate the performance of our business and profitability.

During the second quarter of fiscal 2025, the Company changed its definition of Adjusted EPS per diluted share to exclude the change in fair value of foreign exchange forward contracts to be consistent with its definition of Adjusted EBITDA.

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								Nine Months Ended
		January 31,								January 31,
(in thousands)			2025				2024				2025				2024
Net income (GAAP)		$	16,571			$	21,227			$	73,890			$	89,418
Add back:
Income tax expense			3,145				7,218				20,776				27,953
Interest expense, net			2,816				1,932				7,554				6,322
Depreciation and amortization expense			14,583				12,349				40,851				35,741
Amortization of customer relationship intangibles			—				7,610				—				30,444
EBITDA (Non-GAAP)		$	37,115			$	50,336			$	143,071			$	189,878
Add back:
Acquisition related expenses (1)			—				7				—				47
Restructuring charges, net (2)			520				—				1,653				(198	)
Net loss on debt modification			—				—				364				—
Change in fair value of foreign exchange forward contracts (3)			(1,418	)			(2,342	)			8,266				(241	)
Stock-based compensation expense			2,141				2,784				7,946				7,186
Loss on asset disposal			87				(170	)			229				1,423
Adjusted EBITDA (Non-GAAP)		$	38,445			$	50,615			$	161,529			$	198,095
Net Sales		$	397,580			$	422,102			$	1,309,190			$	1,394,224
Net income margin (GAAP)			4.2	%			5.0	%			5.6	%			6.4	%
Adjusted EBITDA margin (Non-GAAP)			9.7	%			12.0	%			12.3	%			14.2	%

(1) Acquisition related expenses are comprised of expenses related to the RSI acquisition.

(2) Restructuring charges, net are comprised of expenses incurred related to the nationwide reduction-in-force implemented in the third and fourth quarters of fiscal 2023, the reduction in force implemented in the second quarter of fiscal 2025, and the closure of the manufacturing facility located in Orange, Virginia, which was announced in January 2025.

(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								Nine Months Ended
		January 31,								January 31,
(in thousands, except share data)			2025				2024				2025				2024
Net income (GAAP)		$	16,571			$	21,227			$	73,890			$	89,418
Add back:
Acquisition and restructuring related expenses			—				7				—				47
Restructuring charges, net			520				—				1,653				(198	)
Net loss on debt modification			—				—				364				—
Change in fair value of foreign exchange forward contracts (1)			(1,418	)			(2,342	)			8,266				(241	)
Amortization of customer relationship intangibles			—				7,610				—				30,444
Tax benefit of add backs			221				(1,402	)			(2,653	)			(7,844	)
Adjusted net income (Non-GAAP)		$	15,894			$	25,100			$	81,520			$	111,626
Weighted average diluted shares (GAAP)			15,159,442				16,124,198				15,430,164				16,380,756
EPS per diluted share (GAAP)		$	1.09			$	1.32			$	4.79			$	5.46
Adjusted EPS per diluted share (Non-GAAP)		$	1.05			$	1.56			$	5.28			$	6.81

(1) Change in fair value of foreign exchange forward contracts was excluded from Adjusted EPS per diluted share beginning in the second quarter of fiscal 2025 to be consistent with the Company's definition of Adjusted EBITDA. Prior period amounts have been adjusted to conform to current period presentation.

Free Cash Flow
		Nine Months Ended
		January 31,
		2025				2024
Net cash provided by operating activities		$	63,687			$	187,433
Less: Capital expenditures (1)			32,197				55,736
Free cash flow		$	31,490			$	131,697

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

Net Leverage
		Twelve Months Ended
		January 31,
(in thousands)			2025
Net income (GAAP)		$	100,689
Add back:
Income tax expense			28,575
Interest expense, net			9,440
Depreciation and amortization expense			53,448
EBITDA (Non-GAAP)		$	192,152
Add back:
Restructuring charges, net (1)			1,653
Net loss on debt modification			364
Change in fair value of foreign exchange forward contracts (2)			10,050
Stock-based compensation expense			11,442
Loss on asset disposal			548
Adjusted EBITDA (Non-GAAP)		$	216,209
		As of
		January 31,
			2025
Current maturities of long-term debt		$	8,067
Long-term debt, less current maturities			367,277
Total debt			375,344
Less: cash and cash equivalents			(43,484	)
Net debt		$	331,860
Net leverage (3)			1.53

(1) Restructuring charges, net are comprised of expenses incurred related to the nationwide reduction-in-force implemented in the third and fourth quarters of fiscal 2023, the reduction in force implemented in the second quarter of fiscal 2025, and the closure of the manufacturing facility located in Orange, Virginia, which was announced in January 2025.

(2) 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.

(3) Net debt divided by Adjusted EBITDA for the twelve months ended January 31, 2025.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250227838170/en/

Kevin Dunnigan

VP & Treasurer

540-665-9100

Source: American Woodmark Corporation

FAQ

What were American Woodmark's (AMWD) Q3 2025 earnings per share?

AMWD reported GAAP EPS of $1.09 and adjusted EPS of $1.05 for Q3 2025, compared to $1.56 in the same quarter last year.

How much did AMWD's net sales decline in Q3 2025?

Net sales decreased by $24.5 million or 5.8% to $397.6 million compared to the same quarter last fiscal year.

What is the expected cost of AMWD's Orange, Virginia plant closure?

The company expects total pre-tax restructuring costs of $6.0-8.5 million for the Orange, Virginia plant closure, including $2.0-2.5 million in severance costs.

How many shares did AMWD repurchase in the first nine months of fiscal 2025?

AMWD repurchased 752,412 shares (approximately 5.0% of shares outstanding) for $69.1 million.

What is AMWD's financial outlook for fiscal 2025?

The company expects a mid-single-digit decline in net sales year-over-year and Adjusted EBITDA between $210-215 million.