AMWD - Earnings call transcript Q1 2023 | American Woodmark Corporation

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Operator

Good day. And welcome to the American Woodmark Corporation First Fiscal Quarter 2023 Conference Call. Today’s call is being recorded, August 30, 2022.

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 a 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.

filings the those in financial the Reform uncertainties beyond the and begin Harbor the company company’s -- or based or forward-looking may not future will call projected such subject risks to, expressed and Vice statements President the will or does The and Accordingly, go the by the reading experience results differ We clear company Such Securities on and revise and ahead. therein but material even company’s statements statement turn undertake Joachimczyk, if to those to control. made Senior the under of may Exchange conference publicly implied to to its Private factors Act Litigation I shareholders. described factors not company’s are like forward-looking any implied involve make CFO. update the are that Securities company’s expressed it with the XXXX. Please All now by Paul in materially to Safe forward-looking statements. over changes Commission, annual not from may any performance realized. results and or be be include, that would future limited report change

Paul Joachimczyk

welcome And the fiscal first Woodmark’s and quarter Thank American ladies to today time taking to participate. you call. morning, for gentlemen. Good conference

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

Scott Culbreth

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

$XXX.X million Our team XX.X%. growth or net sales of delivered of

the production rate. made-to-order as backlog, improved production our exceeded order by quarter levels and incoming decreased in represented day’s Our

by the the to backlog calendar end We expect of our normalize year.

the prior a we year. platform versus in staffing levels decline challenged units with Our and remains saw stock

operations execute kitchen on increase actions that our as production in for Our will Strong of versus work stock bath, builders our team backlog. grew complete remained and footprint homes relocation we new business to adjustments fall in their across growth addition year. capacity order markets prior Within to sales. this including to construction, work our to continued XX.X% production you

interest be starts. We in housing We are of trends then the market, price homes lived. monitoring short fall fundamentals and the single-family of recent relatively of home and short with still increases household believe declining the formations slowdown would long-term deficit built a as rates,

continue grow pursue will to share. to teams our opportunities Our

remodel prior distributor business, we up XX.X%, center Within Looking for were XX% at independent XX.X% and and with our our which year. versus grew revenue dealer/distributor the center home business home our quarter. up includes the to this, our business, was regards businesses, dealer

to increased platforms. matching $X.XX manufacturing efficiencies adjusted EBITDA or in million was $X.XX. better for impacts, EPS improved Reported pricing $XX.X performance adjusted the and in improvement due Our to XX.X% quarter. is and the XX% EPS mix inflationary was The

and the quarter to reduced Our and has revolving additional million its fiscal debt at $XXX.X company million X.X. paid the $XX.X We under was leverage cash facility. million to end $XX.X of access down the balance in first an credit

starts. order with the remainder we along rates year declines the slowing second year recent the XXXX, expect half For fiscal incoming single-family impact of of to the in

growth net rate year throughout improve retail and in We our rates continue a meaningfully mid-teens we year-over-year to with will Price realization reduce the our sales. and estimate calendar in-stock will backlog partners. contribute

in on sold for environment. at top more of XXXX materials demand and X.X% realized to customers Cost approximately XXXX. prepared navigate fiscal are We fiscal goods attract expectations inflation for and remained was our win a year difficult portfolio product reductions, is logistics short-term and to positioned economic of in what year

restoring expect EBITDA our teams the past committed for We year. few have to in fiscal the noted are calls that double-digit low profitability. adjusted margins I

our to transformation We summer platform our on several received our styles pillars, in ERP on three are growth, of quarter next to transformation planning implementation of continue been launch the the and for the strategy has add efforts our launch efforts from included well and team new delivering main design. last and area marketplace. our Growth way the operations. digital positively and finishes new most and over more against execute that recent manufacturing four by our Digital fiscal optimization commitment

team activated tool of to the what the closing, Platform we will I first producing to call forward also in We in in XXXX. quarter design fiscal the our and month. quarter. back accomplished bath their the am increase for Solution of contributions additional officially stock financial DC details fiscal this now project last results continues on for Management to In Texas, products the began CRM proud digital over work in kicked all look I as capacity. Warehouse turn locations Paul our off year and

Paul Joachimczyk

year. due $XX.X per diluted sales you, million net representing the first last an year, the income million, material the quarter year $XX.X Adjusted in fiscal and Financial in fiscal Thank improvement year. million first for to quarter headlines XX.X% net fiscal share chain of quarter, of was current increase EBITDA $XX.X $XXX.X net increased the to largely Adjusted prior the the combined higher XXXX driven XXX-basis-point year-over-year. was million $XX.X X.X% of for of for $X.XX over supply a sales, compared Adjusted or partially versus were Scott. or same net XX.X% costs or or operational representing $XX.X sales by with net efficiencies and period offset logistics the disruptions. same million income higher $X.XX sales year per quarter share fiscal last by increases diluted and for price million

increasing XX.X% sales and with for the increased dealer/distributor increasing distributor for sales Looking XX%. home and channels quarter, our the home net the center centers quarter, dealer at combined XX.X% and independent channel

XX.X% the with net and fiscal for both first units growth increased dollars. quarter, Timberlake New sales construction in

between sales XX-day in a to in X.X% construction up quarter homes channel XX-day fiscal demand XXXX. cabinet single-family during were starts year their Recognizing the the fiscal quarter. lag start market New installation, first outpaced and overall market first of

quarter, X% Looking first at fiscal decrease year-over-year. saw completions during an we our

the the past seen we have plus, For within year to starts a construction between professions due disruptions support disconnect market. the all completions that and the new

were backlog, and sales XXXX. quarter points in for last sales sales was XX levels. sales year are our of fiscal of large XX% of X.X% the current compared increase versus ratio X.X% of sales. the year in in flow primarily in XXXX, of million the to in current net net year from the X.X% period a profit higher offset quarter reported at totaled year. for separation the fiscal the quarter first the of year to year. cash year the increases cash year of same to net decreased continued fiscal primarily for the XXXX and net a the in -- profit times in and income our of specifically net incentives input -- for negative between was in ratio net first the first XXXX. in of of quarter. by costs. and marketing elevated of margin million sharing, from of XX.X% year with the compared same the net inventory higher fiscal resulting operating due working XX XX.X% the created fiscal net Net and XXXX, positive the we Given in offset operating addition partially fiscal $XX.X in in of the of quarter spending our sales the period sales The capital Gross leverage the fiscal prior first of The The basis impacted sales inflation remains first expenses spending, expenses with sales by year actions in by Selling was year compared EBITDA The with were XXXX, fiscal Total fiscal leverage into fiscal XX.X% was compared increase to in changes at same period quarter offset General company’s starts margin work end the and improvements, positively were by gross partially quarter starting higher expenses which year, first completions, higher operational to same of controlled Free the by was driven created lower for X.X% XXXX. from fiscal accrued and XXXX. flows, quarter sales administrative X.X first adjusted which higher is net positions. pricing $X.X leverage balances

was and rate dependent upon revolver $XXX.X behaviors. The availability XXXX. the paid XXXX, fiscal our $XX.X as fiscal remainder material in down July company highly Shifting XX, of growth sales and XXXX quarter, cash net overall first economic rates focus growth million interest company’s The we of trends, our labor fiscal impacts, industry, During consumer year our under expect position versus is to growth constraints, mid-teens of net million. debt. rate the year

the Our dealer/distributor fiscal new taking home in are second construction price and increases effect centers with effect for our channels quarter. during

XXXX year EBITDA double-digit margin for percentage. adjusted expectation Our low is EBITDA fiscal

for to net outlook X.X% investment by X.X% back increasing of fiscal a capital our capital and of investment our the holding range are will into rate XXXX continue We our business year to we sales.

the the investments digital quality capacity. of continuation platforms ERP these help in cloud, experience to and reinvesting increase our from As on investments to and manufacturing dependencies, a in reminder, our will labor customer get reduce range and facilities our improve journey

and past investments these all American remarks. the -- start members margins improve are continued of It culture efforts sales hard have for and see will to great all who employees our financial stage We our make additional in fiscal the it the choosing company’s put help teams our business, to the strong I grateful show have what Woodmark set years their prepared ones results. is invest and am work for for This ongoing our daily. in accomplished and in our They core team future. efforts. the year. into resilience to to thank returns contributions to concludes enhance employee’s to happen The the of have I our the at are make which start two our want our a the

Question-and-Answer We to questions happy will at Session time. any be this you answer have

Operator

Zelman. of is Instructions] Please Baumgarten Adam go The from question first ahead. [Operator

Adam Baumgarten

Hey. about we the questions. Thanks as revenue for growth? taking talk look and volume my the Nice quarter. you XX% at Can price split that Good between morning. quarter in maybe

Scott Culbreth

down across obviously, platforms. what price is and made-to-order and benefited up both it you business specifically break units, detail then our in were won’t But tell We there, business those I Yeah. of PCS frameless can our Adam. in both the platforms,

function a mentioned as in was I labor which not a my of by however, remarks, production That’s prepared business, capacity, down. our throttled demand. stock of availability. were Our earlier was units function, That

Adam Baumgarten

Okay. price we the like doesn’t aware works goes actions planned. but Thanks. you there I And should second additional home pricing are in that increases of? quarter, the it price any increase Got effective any center fiscal in it. then, sound you be other mentioned the have know

Scott Culbreth

monitoring input start always that we that not were course, additional juncture for we we anything do we If see that move. seeing trigger pricing we action, are continue on and don’t would our to would We but to of based today. such, this at but to cost, hit need points are indicate inflation see

Adam Baumgarten

raw certain I think, they the input seen costs. walk just have cost just the was maybe pieces, through it your a side for lot Okay. lastly you just within moving seems too, moving logistics on some you just out, are whether in then, so seeing maybe just of called relief me, parts basket, And what the have you if input -- like could Great. materials,

Scott Culbreth

Sure.

side, will logistics of the a On it be fuel. function

fuel. little we seen bit have on down a So tick a of

So of benefit surcharges that fuel will we the incur. to start some that

the the maybe to will side, I use word things, guess, is talk plateauing a On some frame way about hardwood. would specifically, raw I I maybe

that were than it plateaued we paying our have high still we that plateau action. the higher all-time an last when is pricing I will that, in space. We took point point point out

deflation, seeing point. high a down, we really plateau it’s seeing at but price not come seeing a So are are we that we

So increasing but slowed. has no juncture, relief pace at at least this the of

Adam Baumgarten

Thanks a Great. lot.

Operator

go Please question next Group. is Ramsey Research The from Steven Thompson of ahead.

Steven Ramsey

morning. Good

second On the Is are I last that? the driving you guide, what mid-teens. slower factors said or sales expectations high-teens, saying to quarter, believe FY that other now half mid-

Scott Culbreth

the don’t are certainly, the year, and have It’s expected the the what we single-family about comments, the any in what we our that next some And It’s XX really happen high-teens and Yeah. end was we half. part to and calendar I is fast move those business. questions second these housing the May, outlook basically When exactly second quarter. uncertainty there days and of forward business. our rely into remodel first with quarter to with questions repair to what tying the the the on construction, throughout solid, we as Steven, obviously mean in tied questions year, as gave made-to-order of going we happens new mid- quarter. delivered pretty I first the the starts to then am principally calendar about

stock Our But play to it’s be a second expect in half. concerns that lot have business, out the I don’t in resilient. space. MTO how we does of

Steven Ramsey

labor demand been and how in adjust overall, labor Do Okay. then, secondly, couple I then Helpful. you in labor, see a to are of coming on stock, quarters? potentially and expect then up slower you you up guess, have you of downward to coming do that, And on production improve around the evolving anticipation issues questions that period. building the labor a

Scott Culbreth

the I question Yes. first. will take second

So stock platform. between sales mentioned to in the address are is persist shifting in where I trying we labor our The today, market better we capacity the of labor. have and challenges last plants we for production call reaffirmed as some quarter the and a ways that, are

we So a find and pool the of use to relatively question space, think available. in I part standpoint, be made-to-order trying the on around platform first of to as we in got the from about your good our to are opportunities we existing add labor availability, it’s business. that shape where labor markets Overall, are aggressive

be going and in We aggressive are navigating to always upticks downticks.

spikes across load the big We is as to the chasing level or we don’t long platform. goal our So as platform to dips can. want be

a typically holidays, we a and ramp half. of we a the part in the our for season output see slower then January. December the and of around big use don’t So last and backlog reduction to want navigate to that we have to manage say have that would year all better in talked we but see Typically about a in sudden up that,

So go that be continues Unfortunately, attrition we of each high navigate forward platforms. all across right-size we as that. to really retention, will and our month

a So should be platform, really we that right-size we to attrition would with need to rates. able accomplish

Steven Ramsey

you. Thank Hopeful.

Operator

ahead. next Please The is from question Collin Jefferies. Verron of go

Collin Verron

as just order backlogs. just the start wanted you on you bit taking are and my give of color is in Thank -- for XXXX? in little August order to seeing much questions. a rates how morning. year Good I and to and what that your how the rates just Can you what in the you rest your gives currently fiscal visibility more into backlogs

Scott Culbreth

Yeah.

So it the platform. depend on does

we to really want are that’s backlogs relevant and make I made-to-order sure So about talk business. our where

would tune for area, we the So had it the what specifically elevated that plus of better backlogs historically to in year the have part be. Xx of

would back be to a We our expectation state. this come of year, are would by starting that end to normal see the down, those calendar and be

to sight now output and our line production be between needs and So to have of got December. very what as we good plan

to January X function of move a start incoming order will that you into rates. As timeframe, the be

you we they So July. specifically about seeing I’d asked are August, fairly similar were the in say rates to

We remodel business. have repair seen and rates order in slowing our

I sold we still across retailers. have our and in their opportunities backlog homes We per not with at builders not of a we close are platform. our aggressively levels do retail think in-stock partners year. se, as not at seeing our fiscal It’s description we have but different are our new stock that as targeted have stocking by are they to looking out of end that the construction yet it the Backlog,

have existing opportunity we the meet got to demand, well to as continue in inventory as the the stores backfill So well. as the

So well that of a the gives standpoint. us part into platform from as line year first of sight production really next

Collin Verron

EBITDA came through most I what think commentary what that progression really was people just your I year last as margin guide? That’s remainder you. should cadence you And above margin EBITDA factors about helpful Okay. to get margin then, came of of think, think quarter, color. low quarter And what the expecting, we your first going, on in just it in the well, double-digit so better to then there? the how were Thank EBITDA the in

Scott Culbreth

Yeah.

expectations we So quarter then and in modeled, a better. better and first is bit bit the was little versus mix that had our SG&A price a little

don’t expectations those were quarterly to big approach what of our what drive guiding So internal We kind over we were EBITDA. the into guided. buckets of method on three a from that delivery get helped want and or

and spoke in year first go will the digits just When performance remainder to we to for to that, some We last quarter be low-double this expect way, high-single with forward. in Paul in want highlighted. our were that low-double revised we expectations take view. our incremental you to are thinking back come it up back you our of full we took our year. we and actions we we all as with pricing May, So said as the There

So that benefit will us.

would So, with in here get margins to the yeah, expect the near-term see for progression forward. opportunity as EBITDA similar I we

Collin Verron

Great. luck much of good the the and year. for you Thank rest very

Scott Culbreth

that. Thank you. Appreciate

Operator

Baird. question next Tim ahead. Wojs go of from The Please is

Tim Wojs

Hey. job. Hey, morning nice Good and guys.

Scott Culbreth

it. Thank you. Appreciate

Paul Joachimczyk

Tim. Thanks,

Tim Wojs

the your in over you seeing of on Maybe terms mix months kind as out positive negative kind mix versus to the you of within expectations? months either or of, the kind of mix, six last orders. mix look any incoming starting I the of just at changes guess, Are nine

Scott Culbreth

Not platform. across price the inside points

probably seeing… made-to-order, we are where specifically I asked and think you

Tim Wojs

Right.

Scott Culbreth

… down. rotation kind up or of

and what channel, we are are the rates that remodel, it’s I that I we been we point are feeling slowing I seeing in this first. and stands repair out seeing time. right, at question, to rates, in each mentioned as think as really say, previous would

home So dealer/distributor that’s our center, business.

are but So in we new in not that construction. experiencing yet made-to-order,

Tim Wojs

or more Okay. that? of are even rates volume still those actually And the than you order kind have positive moderate seen

Scott Culbreth

understand sure question. your I Make

incoming pattern? on So moderate... the You order we a rates, declining seeing said they are were

Tim Wojs

Yeah.

Scott Culbreth

understand… sure Make I

Tim Wojs

am guess volume it thinking about I if in don’t we are I orders, say or when dollar know -- unit you numbers. guys I terms the in

guess So unit I basis... volume a on

Scott Culbreth

Yeah.

Tim Wojs

…is that…

Scott Culbreth

units remarks based. My were

Tim Wojs

Got you.

Okay. Perfect.

Scott Culbreth

Yeah.

Tim Wojs

when longer gross margins. are at kind next guys to just the of quarter that pathway kind you a a rate you margin are gross able term there you I of years you level perspective, and this back post guess, XX% and of then, margin of to XX% of term And couple from go longer over gross upwards getting doing back that mean to a I years? couple is the look

Scott Culbreth

I think two last the is on we EBITDA framed way Tim, business years, kind of margin. years this the we to -- for focus let’s three have the

So into clearly than get can around other I delivered. ranging gross from margin, just target improve and to necessarily further XX% want don’t it we the specific the

we and would rate. that I back So EBITDA to us talked about always take mid-teens the

Now to pricing has what’s going the happen to distorted business. a in bit as

out We with your percentage is significant the EBITDA dilute, have of had even dollars. price is, the what going actions that same gate to

is targets dollar So EBITDA that those in we outlooks. the prescribed had our to goal to back get

Tim Wojs

Okay.

Okay. expectations Good. And then flow the year? from on a free color any full perspective, cash for

Paul Joachimczyk

looking free did the perform QX Yeah. a without doubt. strong in really flow, at here, Tim, we cash

sales. so have the can have that into some see there, drags continue opportunities business, the of to are invest to talked net the of as about are back some you we to X% but going And we we the for improvement, X.X% on on inventories,

kind back that are our in would of driving you to be force growth. tie percent tie sales we is into out there, that’s so going our our EBITDA really that of So to -- kind

should free year. for overall last to be flow year strong cash really comparison the So in

Tim Wojs

Okay.

rest Okay. of Well, and guys. nice year luck good start the Good. on

Paul Joachimczyk

Thanks, Tim.

Scott Culbreth

it. Appreciate

Operator

Capital. go from The of Loop next Shmois is Please ahead. question Garik

Garik Shmois

promotions to to here quarter. in Oh! have I on if more and the I price one ask could. Hi. second Thanks. you Nice pricing I know wanted increase come quarter.

year You of of returns you change in just put seeing signs Are at given signs all? in in the the as any market. the potential to in competitive the landscape, any but earlier the pricing promotions slowdown well,

Scott Culbreth

the at Not current time.

prior quarters, similar to We versus year. to at down continue prior rates promos the slightly see

So nothing’s indicated a change.

of and mindful back to monitoring to see if competition retailers or to that We go that. watching will be look

that many, just manufacturing necessarily Our hope been time, vocal delivery promos is order not, into are many entry basically driving up challenges. the our creates about period for and this, which belief bundling the and years, outlets. we It’s into and of new a not orders consumers the is shorter have

rates. to our get to So into cadence let’s not current be goal a promo and back will try heavy maintain the

Garik Shmois

it. Got

Okay. That’s again. it me. Thanks for

Scott Culbreth

you. Thank

Operator

[Operator Julio is The Instructions] from question Romero Sidoti Company. & of next

Unidentified Analyst

Romero. is Hi. Gillo Julio This Stephen for [ph]

Scott Culbreth

Hi. Good morning.

Unidentified Analyst

like Can what you elasticity own been amount to like in guidance, guess full up, versus about and has the revenue quarter I embedded increases and morning. taken what is follow price the talk in of your your expectations? Good year the

Scott Culbreth

last that part of your Sorry, could you repeat question, second the part?

Unidentified Analyst

been the own What elasticity expectations? versus has your

Scott Culbreth

Yeah.

competitive first marketplace specific the the think see don’t don’t going asked percentages not on you the pricing, I in from disclose price others So question that standpoint. in a We to from appropriate. the it’s industry.

our outlook. just will embedded is tell in We fully the you that to price continue

We have center are this will point prices round the business. we inside made-to-order home our this last to and with taken realize the up and finalizing we then

many on elasticity, top to So loop to close are there that that’s of really are tough so Around I question that. circumstances answer that guess other it’s there. going because the

is to question go driving that we I around it? macroeconomic issue, have asked interest back rates. it the it exactly several is So will rates, is order incoming been what times the just

have quite at Is to that are enough consumer frankly, in that be an purely folks a appetite prices it we even mark have high related function being still reset I perhaps term, price pausing. a and data demand. We So they point home. on have some I and to to if this quite invest high will think pricing or when are our and keep in quite were yet it seen appreciation Home But going remodel their they willingness point think improvement price and to slowdown home still have confidence? business. made-to-order question that, home of elasticity. a time, defaulting to longer don’t to as folks is and I repair a of drives confidence, elasticity they suggesting, to is are

not elasticity. I So yet am worried around

Unidentified Analyst

right. same chain All like levels you. ease supply now level down second as like we be up? would And about as guess challenges maybe should at stay or inventory come Thank think question I my how the maybe

Paul Joachimczyk

Yeah.

you if to really, go increased So wouldn’t was its back was and when really we inventory chain of shortages. kind saw at on stockpiling focus we -- supply so have resiliency there COVID peak,

are to I operating We come procedures back It’s normal go full, to going there. back still when not the supply XXX% to it, chain stability. call does will

do So than out but are levels to trends our more to our still call, to, bring are we those inventory higher remain that there. normal of normal, working actively back down

Unidentified Analyst

All right. my taking Thank questions. you for

Scott Culbreth

you. Thank

Operator

[Operator over ask I to remarks. there Q&A to turn would Mr. Instructions] question, not closing line anyone waiting a to see do is As Joachimczyk for else like the I of End

Paul Joachimczyk

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

Operator

for today’s The Thank conference you attending now concluded. presentation. has

You now disconnect. may

American Woodmark (AMWD) 30 Aug 222023 Q1 Earnings call transcript