American Woodmark (AMWD) 29 Feb 242024 Q3 Earnings call transcript

Good day, everyone, and welcome to the American Woodmark Corporation Third Fiscal Quarter 2024 Conference Call. Today's call is being recorded February 29, 2024.

During this call, the company may discuss certain non-GAAP financial measures included in our earnings release such as adjusted net income, adjusted EBITDA, adjusted EBITDA margin, free cash flow, net leverage and adjusted EPS per diluted share. The earnings release, which can be found on our website, americanwoodmark.com, includes definitions of each of these non-GAAP financial measures. The company's rationale for their usage and the reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures.

website investors, other such our be that use to important as also to information publish may We investor presentations.

call Private factors be control. Act and are the statement that company involve statements may begin by to and company's the the We'll uncertainties risks safe made under by the company's XXXX. change Securities beyond of Reform subject the material Litigation All forward-looking reading harbor based on

expressed its the stock or the or are experience does shareholders. if differ realized. those Exchange Accordingly, undertake described future it forward-looking materially or annual future statements. filings forward-looking and financial performance company not company's and changes revise will that therein the with The expressed those but statements, to results to in may any results implied Such company's and projected make even to, to in include, such report the Commission be Securities not any from not factors clear implied or publicly update limited

floor go like Senior CFO. and I would President Vice turn Please Joachimczyk, Paul over sir. to to ahead, now the

Good participate. for Thank today taking time third welcome to American quarter you conference the to afternoon, fiscal and call. Woodmark's

the will regarding questions. Joining begin add I'll happy Culbreth, your answer After be CEO. to financial President review our of me performance. is details and quarter, our with Scott Scott and a additional comments, we'll

fiscal quarter and everyone today call. to for our Paul, earnings thanks third you, us Thank joining for

net the XX% our declined delivered team $XXX.X net representing construction, prior versus prior Our of new XX.X% year. versus million, Within decline a sales year. of sales

improving marketplace. from spring. XX national plan partners to the customers the remain are realizing benefit to and direct in builders. our measure model, new head AHV's with the strategically aligned builder housing existing our XX best-in-class grow as and such share continue demand and starts, gains We the data Recent share With we [ and top service key into regional ] sentiment we to as builders with of point points our

and XX.X% distributor prior this, versus Looking our at down remodel, declined the includes our which revenue Within business businesses, and independent home remain trends and was center the prior pressure XX.X% distributor deal versus home center projects. the down lower to XX.X% size choosing regards With business, rates in-store consumers prior dealer smaller year. traffic our we Demand year. to under were due versus year.

due EPS and adjusted EBITDA percentage improvement EBITDA our EPS increased platforms. The but improved XX% to mix basis and $X.XX. is adjusted to X.X% million, in points Reported product $XX.X margin the efficiencies Our was decreased was XXX to for the adjusted manufacturing $X.XX performance in quarter.

Our team continues to in drive our plans. operational excellence

and And XXX,XXX at EBITDA, to Our under its company cash adjusted of company was third an balance reduced revolving was quarter. Leverage shares access to $XX.X fiscal the X.XXx additional quarter. the in $XXX.X the end facility. million million the credit repurchased has the

Our digits. net fiscal of our expectation a unchanged low single sales high with for outlook fiscal decline sales with down year QX remains double-digit 'XX

million expectations to to quarter year adjusted fiscal Due $XXX range strong and for is narrowing EBITDA the a $XXX our fiscal the performance, third increasing of to full million.

cabinetry. serve targeting pillars: to SKU low launch X continues offering team of from benefit will growth, the has high-value that Our distribution our in execute will our the a customers and new that strategy home Growth transformation design. and main platform against centers a brand digital PROs XXXX

business. our go-live Monterrey, featuring Digital styles enhancements home quarter of finishes. Hamlet, of include will upcoming summer launch and transformation business last from and on-trend in from WMS benefit they new efforts ERP North website the go-live fiscal over the made-to-order Carolina at Our go-live also the for center the

and the work ERP our with continues service Carolina care customer organization, continues work [ Mexico design Platform our construction in the phase CRM planning from location next service operations and May new supporting of for and facilities. Hamlet, center The January. includes for modules products of February. shipments first components shipment our bath in North of Monterrey, from ] And stock to our

We the and In to team ramp what 'XX. teammates closing, new installations quarter third with contributions months, proud fiscal their look this I'm forward training continue fiscal the and in our support along coming hiring equipment will of continuing plan. in the to year accomplished during

back now I for will quarter. for call the the additional details Paul financial turn the over results to on

were sales decreasing prior a XX.X% versus year, Reviewing of representing decreased home XX.X% and you, XX.X% $XX.X independent distributors respectively. the dealer with both decrease results million combines and year. Scott. centers year home XXXX. for our centers prior Remodel third XX.X%, Thank fiscal third dealer $XXX.X independent quarter and and sales, distributors for which Net or million, versus net quarter

construction New XX% to decreased for sales the last year. compared net quarter

benefited matching the Our pricing supply sales margin net year. of XX.X% impacts chain. fiscal along with for our quarter of gross in basis third points combined versus with in XXXX improved from in mix product our profit margin inflationary favorable XXX operational the facilities, to stability XX.X% and improvements the same last year period costs Gross manufacturing reported

the point third diluted versus excluding lower was $X.XX incentives in year to fiscal per increases of diluted operating sales. XXX The was million for year. $XX.X Adjusted $X.XX sharing XXXX XX.X% is fiscal quarter Total expenses, million of per year. our all share XX.X% $XX.X same any or and restructuring last for increase last third net charges year net in or basis sales period and the for profit of quarter versus the share employees income XXXX due

this work spending. result net and supply our Despite controlling our facing our and improvement year-to-date volume or into strong reestablishing net hard XXXX the same direct a have or reported maintaining XX.X% in operational earnings for year-over-year. our efficiencies, performance and headwinds, a XXX was of basis EBITDA continued of million XX% of the effort teams year and period million put chain stabilizing overall is represents last year fiscal Adjusted point sales the third $XX year of sales versus quarter $XX.X

offset digital incentive sharing in gains profit and increases compensation, earning costs. are by transformation These partially

prior Free million The cash year. and cash income the net specifically for positive was flow partially million due in flows, operating higher a increase lower capital compared increased changes expenditures. million $XX.X offset fiscal our totaled year-to-date to inventory, the to $XXX.X in current by primarily $XX.X

the year. X.XXx Net end the quarter third the EBITDA adjusted leverage X.XXx year X.X% was from at of improvement last a of representing as fiscal of XXXX,

million cash on our availability As cash of $XX.X January revolving additional to equivalents under had facility. of of XX, XXXX, plus million the company hand, $XXX.X access and

company quarter of X.X% representing share the Under the the third purchased shares outstanding current in $XX.X or about being repurchase retired. XXX,XXX program, approximately million shares

repurchased X million first million shares common authorization the we share remaining. repurchase of and $XXX.X company's have the $XX.X have For of months,

Our in rates perspective, sales XXXX from consumer year highly outlook expect sales dependent a to double-digit in behaviors. high economic for impacts, The material declines and upon is net constraints, the with growth XXXX, change sales single-digit fiscal low quarter. in overall trends, net versus net industry, continue the declines fiscal fiscal year interest fourth we labor

performance a execution increase for X our The adjusted are we first the year, of year the to our to full $XXX months for year of we expected in XXXX. the of million. EBITDA the operational $XXX due and our XXXX months performance strong million to increasing X the outlook fiscal fiscal the first range Given strong have is expectation achieved in our and narrowing

approximately be quarter, locations our our past Hamlet, Reiterating the and full without have the continue from in more in than expenses we'll fourth charges North million in remaining fiscal we is those operational and will up incurring in impact offsetting Monterrey, total performance outlook the $X begun charges revenue the new quarter. locations. will million as to half these fiscal production we the our calendar results XXXX year. impact full $X The to of operations of ramp year This Carolina these throughout of occurring Mexico, negatively with

these that business and my dedicated remainder throughout closing, stands continues our year. as diligence the to positively commitment, testament impact financials In of the of the our unwavering success contributions enhancements alignment are will our to This daily. force fiscal the a anticipate They daily in team Woodmark. ones I strategy. our driving our member with behind American They are all gratitude happen it to make employees, GDP at every who extend the heartfelt accomplishments.

happy have this prepared answer at time. remarks. our be you to concludes This any questions We'll

first from Our Capital. from Shmois today Instructions] Loop Garik [Operator question comes

into particular, if was in little remodel bit you around you some detail a hoping more can go in-stock on side, can customer? detail on the I provide semi seeing what you're versus

Yes, Garik.

at we So sell-through across business, look the major when the standpoint. any not from seeing categories differences rate remodel a we're

the as well as order comparably inside stock in special home period. centers and the the So performed

into Got go Wondering more if some could it. detail. you

that? you was think an talked What mix. improvement in product I driving about

be would mix foremost. across That channels first our and

rotation going hang to recent across respective fiscal little sold bit And in know new the equation construction channels totality, year, remodel, of some us a mix. an quarter. there down. but in inside perhaps We've this got. we ability overall the on that really really mix through what the we've most experienced favorable We've channel. for that into seen not inside to that a of was speculation So I seen we've the each

in growth say, thoughts perhaps Got we you And we're but of a the from market, longer-term quarters. not market how think share it. heard on X know low if then fiscal competitor I your able maybe next, over a view 'XX, think any calendar single-digit to anticipating the you're maybe just 'XX I yet, declines

or observations deviation off Just that? curious any you similar of any if have

Sure. share And you're right. ready to XXXX. an outlook year fiscal not We're beyond

internally budgetary Vegas in hearing year you in really call. is across categories, ready of the starting seeing our releases said this in products are the and cycle be of meetings out next and then, what customers We'll fiscal recent we our show a was week. a the though, Our 'XX space, that in other building now. we're full course, there With outlook give market, certainly, competitors, number to

analysts starts calendar I still seeing I we're all the together, mixed. bit mid-single-digit seeing range think for those to low hearing inputs So what if the growth single-family take that talk is a about year. for We're is of and

one mid-single to from Home just reported their the year. the centers, figures pressure, estimates on the bit outlook side. is there again, digits the on signaled for calendar year comps calendar to remain continues 'XX, a that their in negative under and negative remodel think both I low

quarters, last that certainly, category signaled the they that. than performing both And worse for our X was

in that to new the down construction say low-, I mid-single. totality, if of mid- together, single repair take I was would and to it, So up call model, that all

the I think is of sort view. market

that be model. this is and will than the both new same construction and better been for many repair it's perspective, as years we should and perform Our in that

yet and perform and share our better translates into that's at So give to market but I'm the that. we'll expectation than ready least what gain outlook, that an not you view that is

Our Group. from Research next question Thompson comes from Steven Ramsey

the margins with to and think facilities and and potentially to months adaptable or new Wanted in looking next out ramp you over the coming how how run profile going online? are that rolls the impacts curious now gross down about as with those and new forward the facilities up up XX running, demand production

Yes.

Specifically to adapt production. down the first ramp or our up ability part on and the to question of ramp

done Our operations able team has that. do to job historically of a fantastic being

COVID, better been would labor our that, to biggest our environment, but a certainly that be a barrier have seen have We always is During labor. will internally challenge. continue belief

ramp down, So of sure that bit course, little past capability over more ramping make of a to we've as year in scenario. a we've needed, frankly, up flexibility done this lot to easier work and quite got

opportunities in be capacity, to that with and know that next I full Specific you finding be we'll our a that commercial part the don't a outlook we'll to job our conversation share working exactly are all will market us perspective. again that able on to get fill that doing great capacity. of quarter. from when for teams ramp to

That's others through publicly maybe trends thinking be their first home about that recovery in that and look channel, from curious outlook? the Okay. looking there? potential may for helpful. and Do anything the repair through And dealer in signals you're not at centers? a Just remodel stated you you're marketplace then there's if for at looking

that say really different in see data outlets would first. marketplace. that's what other Nothing looking those the points at we're outside of you from I

back existing away they experiences with own, that home course, invest happening to going an happening Are with asset to sales, home an rates. the to what's investment consumer dollars. a in their transaction. What's they So shift happening spend what's in creates back an opportunity of interest from and with for sentiment, willingness

going come we've we're viewing same cycle, the things at seen Depending on you're So -- there. things are that the to back seen we've faster. difference different the look channels

leading point indicator, I the to So as want dealers don't indicator varied home I over years. to a don't center to a because they want to have point leading a and both

then those both So and activity eye our outlet and around the are jobs type of we at of particular bidding. system look factors keep outside

Okay. produced to me. there helpful. for that Or that's full in just And sure one results guide? bolster raised, quick That's make year that year-to-date? is outlook margin the then QX The last outlook anything helps from already to

Steven, I'm not tracking your question.

going X And quarter. to So we've year year. range months we're the include to that going it's within first everything full to where the a give trying that outlook that exactly the we're of achieved give through the doesn't you of last for be

sure, better Got the there to you. raised is than there is year-to-date Yes. shaping you for from results? is make EBITDA Or that is what thought I mostly outlook? just wanted -- the to QX up -- prior outlook, attributable

we're a the Throughout both. of lot combination a it's say I'd year, better. Yes. performing

the year. us our confidence raise essence gives the So to outlook full for in

comes from Our next Tim from Baird. question Wojs

to brand. might maybe kind market targets Can then kind related kind the us of bit business? for of Maybe give the X- just the what growth the of -- to you X-year just to behind that a the of XXXX brand? maybe of And on introduction your little start, of new color strategy Scott, be where

prior the to brand, builder X us was thought that how of launching And when that our with about particular obtaining cabinetry wondering and Timberlake. to brand their regardless that brand serve about construction go to strategy was product. market XXXX, was really we that it new

been we've with underneath our all dealers, to but So give right actually that the a the to whether it's model distributors, business what service now builder choice provide umbrella. XXXX we've will we utilize. We got consolidate of Woodmark want that focused we've to and also platforms a able now various principally to that We're specifically to as done be the on product requirements. some their remodel to able want a a to contract sure or make they right or brand

go-live is about excited we're actual it. So The March X.

before, a commercial our X. and it distributors. website week we're available team already So live is and March obviously, our be up the already on will preselling talking, but It's out to and

that's gives be think channel. conflict take opportunity some potential we it away channel great existed perhaps from and more to in the an that So a to will us growth in opportunity drive past

that's in in the overall just I'll that market I As a a today want refresh outlook that specific far shared to part as goals, and on to Investor of have that posted strategy the in put we out specific I on don't goal that. the the that Relations and tell January did back you our deck. We website.

So into financial factored model. that that's

first Okay. or million is the to start-up year? kind next you're cost, kind too next you about guess, should don't leads we know half But year. the Very year. much that $X start-up I about on the just of kind -- year $X to I of want some Maybe this into there of, tail, think million any cost good. next talk of

It's start-up tail. cost a not necessarily

That's to away, lot we It costs of and costs So ready would that go ramping. deleveraged. start-up say production a being being to right? had the the prior now will for shift I

ramp you fixed haven't a 'XX. some results if fully costs have yet we roll utilizing you're those ready be out we we'll associated had some there. not fiscal this to those deleverage give absorbing we're with cost year like So have fully get modeled right, the but there'll that and through won't would in we that But facilities look, to

in new Are in and a you some R&R is how your other product have of changes seeing in is guys of Or consumer the kind that Woodmark negative There's about, around a And the it built homes of for situation on trade maybe or where that? evolve? and industries kind construction. down, smaller one it's markets portfolio impacting to just American mix benefit been kind then mix terms the mix. building actually it's some market whether talked just of it's of Okay. some last me, categories those

after, latter of Tim. our category in think folks you semi-customer see sitting we other not it, Yes, down even categories range where we're part. go move points got products. building custom When you price might the that in our the about and It's the you portfolio or

So market focused we've go for where we the the That's a point that's is offering. shifting. decades, been price company value after where as and

So call, seen haven't we're we a not our even already down inside dealing with at the points. the at rotation I much rotation price earlier in higher the We're value price it And portfolio shared now. really points.

[Operator Instructions] comes Verron Our next from question Collin Jefferies. from

was R&R year just be builder on the the sentiment wanted half at on on for be if probably thoughts rate factor? from back calendar manufacturers any a story to I you product needs like like start I second just or market just think commentary will when guess a come I it had and R&R week. you the how market. other demand based building back, But looks snap other that happen what It curious level to that really quickly to And show 'XX, this some the can in certain mortgage happens? whether

take part on I'll equation. Yes, the latter the first

there. come want back in meaningful And it. we're going come. make internally We not ready in talk when want there's pent-up just they're are back. So We it for it will we It comes will comfortable do fast We fashion sure pretty believe a again, quicker consumers how to come to some a demand anticipating. I'm get lot than probably sure. about projects. to

be I to know going We are the we're will do really to what's to stronger. is Interest things list, drive happen. half going of think we've we think going the keep that at on help that the focused then, top bringing actually being about June. the and repair We What well rates on second as a looking we're as points. I March think rates model. XX% it's helps estimate move. potential new basis reduction somewhat it see But out pushed to think a down XX Even interest to now construction that that.

see And last, We home I All-time that's on business think, then need existing the an one, increase. XX of do, this of home as transaction both our sales last the to numbers last to see see the remodel, move sales. We need lows creates sides they for up over we year. years existing calendar opportunity and up. those back the that usually pick when sale the numbers

So those on. we're X focused big would indicators be the

really you most on then And in 'XX your how quarter? trended deflation That's can just you're unit here? look helpful how And inflation Great. about you costs just comment calendar or as color. year out to the recent cost thinking

I The a Yes. out -- things guess couple call you, I'd yes. X well, of things for

one, So on input cost.

of lumber move to particleboard the an has up increases. seen have hardwood start We maple And bit specifically, move price seen around announcements a also some some some the little the saw recently we example, end as towards that of then quarter. up

to to we've That's That's not mile an on and item is going seen. keeping move. labor, final progress course, stop. delivery. that an those, of another will eye then box And So always continue to be going

So a different couple of from ones, quarters. not seen in past mile we've then key couple final will of the too raws and the the and labor what be

there? price in lower on just I your the how any then, competition current to And any environment? guess, pressure or given thoughts customers helpful. reduce the any from That's color pricing price demand you more Okay. seeing mix thinking quarter. Are Just you're just about

of activity of of uptick and really fiscal lower year. a bit little considerable a promotional maybe conversation see We've driver for an promotional because our seen repair of the not a What sometimes remodel, in activity us. you'll throughout demand. all factored pricing in is Demand in increase not the Yes. being really but is

not but as starting with again, deflation we've far volume-driven, As conversations had last folks driven. pricing, year,

So on make if seen to we'll those and deflation specific and costs, input have appropriate we've it's adjustments conversations.

any And remarks. Joachimczyk go back like at for Mr. to closing not ahead, sir. turn additional to Please the this seeing any I'd I'm over time, floor questions.

you call. concludes Thank Since time the for there no additional are our participate. questions, to this all taking

you joining. and and call presentation. today's for Ladies thank gentlemen, concludes We that conference

You disconnect your may lines. now