Earnings call transcript Q4 2023

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Operator

Good day, and welcome to the American Woodmark Corporation Fourth Fiscal Quarter 2023 Conference Call. Today's call is being recorded, May 25, 2023.

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 -- I'm sorry, 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.

the the Reform uncertainties and begin Harbor the company forward-looking materially will call or risks the by reading We and material company's statements to change based statement made and beyond under of Private Act Litigation in Accordingly, are involve Securities control. XXXX. All company's by future forward-looking the on performance be statements. expressed subject the results financial from any such differ may the implied factors Safe that those company's may

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

to Vice President I'd now Please Senior Paul CFO. sir. turn to over like ahead, go and Joachimczyk, call conference the

Paul Joachimczyk

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

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

Scott Culbreth

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

Within the our optimistic as decline grew and X.X% the alignment shared year. have in going prior in quarter's team outlook of sales Our cautiously million, new improved business sales are the versus with delivered net construction, year since year. prior forward versus $XXX call. start of X.X% Builders of our a last

versus builders XX% XX% to forecasted now year. modest XXXX in a projecting growth decline are entering starts the in Some

a new fundamentals strong, deficit of there continues have improve. the home be been Cancellation begun short to and of built of number and sales homes to remain formations. market rates following have in normalizing the The long-term household

share new existing our We plan and grow customers. to with

our dealer/distributor the and home year. independent Looking our year. was revenue versus XX.X% Within model, X.X% which includes the at declined home prior down this, prior our center versus center business businesses,

made-to-order business and kitchen down bath with Our double prior digits versus single the was kitchen year. stock digits down

business the Our stock stock by entire retailer, year business the by through bath POS. of loss was inventory sell impacted negatively impacted at was efforts promo versus and de-stocking customers prior to short our to

down in-store the addition, past quarter home over traffic center In was for customers. our

we areas prior business, X.X% trends builders year. in in activity consumers the and and spring on two the summer. order months dealer/distributor our down were to as versus take regards the Incoming both With have for improved last

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

supply Operational with higher labor performance our enabled stability efficiencies. platform and chain, continued which in

plans. to continues ops Our excellence team our drive in

company the end was at credit $XXX.X fiscal revolving on and million an the its $XX.X Our cash the access has fourth balance quarter, million to of additional facility.

to the Leverage during quarter. company debt reduced million $XX was in times as paid adjusted EBITDA down X.XX the

fiscal capital allocation leverage revised opportunistic year significant year, in the With prior improvement versus fiscal share include 'XX. in our repurchases to will be

available our use. for As a reminder, remains $XX million authorization

and that fiscal delivered we We commitment. restore on profitability year committed 'XX, to in

year repair new declines fiscal 'XX sees model. and in and for outlook Our both market construction

$XXX targeted Decremental digits. range to margins Our in expectation from teens our is double decline to million. $XXX low are and be the to sales adjusted EBITDA to for expectations million

adjusted appropriate unchanged. the to slowdown is over a will and X% believe CAGR $XXX net five years X% over Our grow Despite view on near-term remains on sales million. to we a in EBITDA that next performance we financial demand,

team digital growth, transformation, Our against platform and to that execute design. pillars; strategy main our three has continues

the brands launch from benefit summer of expansion will channels. our upcoming and availability product our Growth and into of additional existing

of the network dealer in price for point count, open low example, SKU our an cabinet line availability recently high-value As the we expanded our Southeast.

efforts over ERP efforts Digital our and planning. the fiscal quarter including transformation operations, ongoing manufacturing last implementation next the Monterrey area location include the for design of planning in global

completed goes build the sprints CRM live six which Our this of team has summer. project, of of our eight phase the

traffic driving center We have dealer/distributor also and home online in our our invested partners. and through capabilities, conversion

have programs. emphasis traffic made-to-stock higher on driving to which conversion improving leading for Specifically within we home centers, is select placed and our SEO,

We including continued content for pages, best online and enhancing imagery. XXX-degree our display product A-plus excellence have infographics, in committed content practices and also to focusing on video,

partner continued which through dealer our our CRM. allows those we've drive our leads us also program, team directly generation our to to dealer/distributor, connecting to For in while network lead field leads to sales

are we Additionally, value allowing company committed to to our expansion, partners. our grow through e-commerce

on kitchen Automation inspection, million process stock we've over automation. will panel committed handling, accelerating is XXXX steel wall $XX capacity efforts and in bath footers Mexico, in continue, over with loading, Carolina. installed for additional expansion underway Monterrey, year deliver work years, prepped initial and next installation automation unloading, is in projects fiscal the investments a lines. our Hamlet, cabinetry North with pad This and of the design material and XX% five and focused in over Platform product

fiscal of fiscal proud I'm what during contributions and to closing, this forward team accomplished 'XX. year their in In quarter look the fourth

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

Paul Joachimczyk

Thank you, Scott.

fourth year were $XXX of X.X% year to performance Net I fiscal with fourth close sales will XXXX. decrease for same results, XXXX the last year outlook quarter our representing million, period our our fiscal then the of for about a first talk over year. and transition fiscal full quarter

net centers combined fiscal fourth home dealer/distributor XX.X% and sales The with dealer distributor decreased and for center decreasing X.X% and home quarter, independent decreasing the X.X%.

the year. X.X% sales net prior fiscal increased compared fourth construction quarter New for the to

the of last of a year margin in year, quarter Gross fiscal XX.X% sales manufacturing fourth pricing the XXXX operational offset in same was labor for improvements our in reported positively quarter increased actions, in net the of representing point domestic chain, fiscal the margin by profit improvement. XXX costs gross partially company's by fourth XX.X% supply The of basis the in impacted logistic quarter our facilities, the and current expenses. year and our stability was versus

We QX are returning to at our performance own where and to performance are due our our QX industry. seasonality cycles, levels of fiscal higher the

fourth increases due our digital any in functions. sales XXXX. sharing by XXX partially SG&A increased fiscal fiscal restructuring The was expenses, of of of year in net in spend, period quarter Total spending profit XXXX charges sales in compared in year and the with operating ratio incentives, net XX.X% exclusive same of the to offset basis points XX.X% controlled

fourth in quarter share $XX.X Adjusted net of $XX.X million income XXXX versus $X.XX EBITDA quarter share per for year fiscal or of the Adjusted or was year. $X.XX per million fourth diluted the last or year, was fiscal the of basis compared XXXX to $XX.X a representing point for of million $XX.X same X.X% quarter year improvement XX.X% prior sales, in or million year-over-year. sales XXX fiscal net the net diluted

of estimate purchases an to income We of termination. prior if are expected for maximum to Form needs Commerce be duties to related on those is tax. million determination the included, make beat prior plywood to XX-K. to filing to we charge a And approximately of suppliers such the company's vigorously potential the the additional net appeal plan impact of net our a final $X

not order XXXX. have June context, of For an we placed since

and Our centers dealer/distributor The were with full billion, $X.X and increase million independent home combined growth or of year center full increasing X.X% aligning X.X% representing $XXX XX.X%, increasing net the dealer/distributor expectations performance. Net home year XX.X%. rate. of year, an our sales double-digit with increased for sales low fiscal

net was to representing teams for XX.X% XX.X% work profit to prior the reported a of New operating improvement. fiscal XXX point year sales year year, year. fiscal to hard increased company's net our metrics. the have sales place historical into the The changes construction gross of This and last return testament the a XX.X% for put margin the performance the basis compared great versus is

XX.X% the spend, offset the the net spending charges The the from fiscal the year by expenses, Total the by and due point exclusive of income by of of and price and in increases digital increased in sales in created in and XX.X% profit-sharing operating restructuring $XX.X fiscal XX net offset SG&A incentive increases largely higher leverage for fiscal year million sales. to functions due prior improvements was Adjusted any operations, compared expenses. incentives net XXXX reduced our current to sales increase driven partially to increases basis across were higher our in sales, year.

our expected point XX.X% achieving EBITDA for was million the XXXX net representing for a the $XXX.X basis of X.X% prior XXX year, fiscal net compared fiscal Adjusted year-over-year, million, of sales of $XXX end year high improvement to or or range. sales,

performance have direct the and our efforts the and spending offset work teams into by put controlling strong SG&A chain, sharing. compensation hard in of and profit supply is incentive year The efficiencies, functions, a operating this reestablishing in our our increases stabilizing our result

operating to and Free free cash million in specifically lower flows, current to flows our increase capital $XXX.X net negative lower cash million million cash compared $XXX.X higher totaled a The flow due for prior year, was receivable, a fiscal $XX.X in the the positive changes year. accounts spending. income, primarily in

fiscal X.XX fiscal X.XX year end times times times was a leverage the the representing end of from EBITDA the year, the at X.XX Net of adjusted XXXX. improvement at

million XXXX. credit $XX.X cash plus and company of April revolving under and revolving of of As fiscal had The $XXX.X its facility. cash down access company its equivalents of to year hand, XXXX, XX, million $XXX.X additional million availability in on term facilities the paid

XXXX. outlook Our year fiscal for

consumer interest low dependent labor XXXX. net industry, double-digit change is expect declines fiscal The and sales impacts, versus trends, highly overall constraints, economic, rates, material in sales We in net upon behaviors. year

Our the $XXX for range margin $XXX of targeted is to expectation EBITDA year in million million. XXXX fiscal

cycles, I in Monterrey, performance the year, to portion charges we be North total back impact business in million that expansion Carolina. these as fiscal in the emphasize is want with the forward in a our expectations is to The incurring not and of will XXXX. charges full at approximately will Hamlet, quarterly its normal be our fiscal levels related QX, QX to fiscal highest of platform the lower $X.X operating outlooks. one-time Looking fiscal is significant or providing and year our QX we of Mexico

back investing investing for transformation Carolina, North plant investments continuing on Salesforce expansions be and path into Our Oracle XXXX in first Mexico; our the with fiscal and capital priorities focusing Hamlet, on automation. Monterrey, the allocation our in in for business will digital year

our fiscal debt be year and de-prioritizing we'll XXXX. leverage down lastly, paying be we have we in wanted will opportunistic Next, share a at our item. in ratio additional we debt position And to One repurchases. achieve,

at occur year time. X:XX p.m. in the be be the we XXXX, calls trading fiscal and earnings to will adjusting of call our will standard after Eastern For hours timing

changing In of commitment, testament closing, great, those work, what the in the it the for achieve and to team is through our fully America results, macroeconomic environment. progress teams have to year of to fiscal throughout to They hard at our thank react the see and company the performance. and their the all results make efforts members grateful efforts. our have the our dynamics financial continued been who a made to Woodmark happen that the and daily. employees I'm for are they in ones invest accomplished read This

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

Operator

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

Adam Baumgarten

some the piece Nice revenue double-digit I just start for in on specifics outlook? good on versus that additional morning, guys. your the residential Hi, just remodel guess results. outlook. assumptions decline Maybe maybe new to

Scott Culbreth

We're market that and both projections remodel construction. are 'XX throughout Adam. mid-teens. year Most new the the to have see calendar think, I Thanks, likely single-family down starts Sure. in in declines, of

based margin saw historically, QX you there's And I we've home remodel than maybe side, expect decrementals I think with roughly the that targeted over and XX%. now then that upside the on on side, two We mid-single-digit of the that validated weeks. a to market. And center activity. reports range, on little the obviously the of last the better think perform

as well for we 'XX. I with fiscal our think outlook we'll indicated as that beat year

Adam Baumgarten

deleverage on is Got be historical. which that that the outlook, thanks. you'll what guess, just than main decremental offsets volume I fiscal maybe are in 'XX seeing? the And it, better to

Scott Culbreth

OpEx Operating and just performance, teams. within automation overall our initiatives

Adam Baumgarten

is just expected contributor revenue the price for Okay. Got that outlook, lastly, just still then a year? be And it. positive to in

Scott Culbreth

in point No, we've channels and not pricing lapped taken any pricing, actions in the point at time, at in time. this we've the of any this

Adam Baumgarten

great. luck Okay, Best

Operator

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

Garik Shmois

Hi, congratulations wanted and the thanks up follow pricing. on I on to quarter. just

if or in as been the there's just change sales promotional weaker well? seen the pricing you've any given If any environment, change environment to

Scott Culbreth

Yes.

of So we'll take each those separately.

throughout continue again, to were all other we've final you Certainly, seen our to actions I pricing some profitability any on categories would experienced but any we returned and see by channels. in we has materials. labor, improvement remind in I taken impacts mile we've other to inflationary first pricing delivery, saying the achieving we've the also not of raw like counter in would pandemic. prior the not So the side, that levels lumber, some that increases the

Our if we a and expectation marketplace, or it'd by see be deflation the belief some is, result spend. that, to additional of see the continue as offset around reduced there's pricing in

with first that an space. pricing. think side, increase the And have folks opposed any going I to go we category dealing are to On promotional dealer/distributor promo seen most the in in principally as activity, to

Garik Shmois

could Understood. is be just Thanks going as North it when the more filling bit Mexico? a in color in wondering provide you fully for confidence of to Carolina And the come online. little your if capacity level that. when does to capacity and online I'm

Scott Culbreth

Yes.

first year be push able back to is by investor and coming capacity have plan always there's way, certainly fill that five need January. the we we make our the deck desire online. I'd put plans our demand out that it, in Now to But and a capacity between mismatch in the to meet relations we comment as forward. We'll typically

of them our We timeline to online year. both on by fiscal end current should for ramp is the the Our starting and track have facilities.

So of and pushed expectations year. next benefit from capacity incremental fiscal into really the most the

Garik Shmois

All it. line. the got for I'll right. Thanks that. pass Okay,

Operator

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

Unidentified Analyst

for Thank questions. Hi, good my morning, Steven. you for it's actually [Brian Barrows] on taking

on the the Can on for the that's or flat. it's year you guidance, you touch it that implies can think the gross the levers how different reduced if progresses for if on pull spend? kind year I I of just guess, I more much or hold implies think margins roughly margins, flattish -- marketing throughout OpEx additional there reduced are EBITDA outlooks? as

Paul Joachimczyk

Yes, question. in it -- Brian. for gross year be does there the margin XXXX. fiscal account Thanks some will Really, expansion for

there and meet to overall of there. market into if could really the additional help that out is demands change levers of increased call come spend be, EBITDA Some that could going do we there. facets that's it, the SG&A There that the I'll are adjust out expectations to out and drive our

Unidentified Analyst

little out you. Thank about is follow-up, it. for guess, be in talk demand remarks accelerated And in that touched can environment helpful you Got you quantity -- additional any or if again more on on a being the slower I impact. demand But plans the the slower would color environment, a here, I impactful think bit. rolling decelerated automation And that's capabilities? and prepared

Scott Culbreth

So topic on we new focus continue That's not to automation. a for us.

more what's of the a in think bit made targeting that. we've is a we're that investments around I different declaration

substantially five the next million for shooting would years. $XX we prior five more over in year have what spent again, the we're than So cycle. That's

a 'XX. the that on initiatives inside we're I got we've in fiscal specifically focused prepared that host of remarks mentioned year So already whole

Unidentified Analyst

Thank you.

Operator

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

Collin Verron

pace any how taking on least Hi can great. question. talk about that bottoming of recovery year great quarter. little decline you're Maybe the kind into But bit the guys. you expecting in see guess five $X.X mean to fiscal 'XX the more things Thanks color this about before in 'XX? And sales thinking returning of you're I and baked year a you're for of 'XX. million I Just could out Or in longer just your Do low here timing my term. of double-digit target about a fiscal in sales thinking how into EBITDA. would linger decline $XXX fiscal be billion? sort at growth? year you recovery

Scott Culbreth

be Thanks start wrong. whatever Yes. I'll I saying and question, I I for statement by know I'll make, the or assumption have

sure that as year to impact. that. that would we of but back we point at 'XX, time, in January let's be our case we grow modeled a always going So gave we then weren't a had down was up recessionary with in off assumed exactly would 'XX, particular it factor. back when happen, lead We that When a projection and five

this most says go point 'XX. analysis. ball start at lot into crystal My But we that of that that impact 'XX. time, in again would So marks in see of and recover growth see question that a happening we to in there's

Collin Verron

more of near talked further forward of expectations And what That's any your and de-stocking I that channel? guess in sense in that stock Any you about helpful. magnitude for the business. de-stocking some remodeling term, the Great. going was de-stocking

Scott Culbreth

gotten see 'XX. incoming better uptick de-stocking efforts, we've a the fiscal for year inside on little orders our to think through QX starting and I we're fiscal bit

we're to have over think I the value an to assign I past So that somewhat don't exact able that. be last to quarter.

Collin Verron

And luck appreciate I good Great. going the forward. color.

Scott Culbreth

Thank Okay you.

Operator

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

Tim Wojs

is. morning, guys. whatever Good good afternoon Hi it and or

Scott Culbreth

Good Tim. morning, Great.

Tim Wojs

Yes. question. Nice a Maybe kind of just job. conceptual picture bigger

Just kind within maybe share think of uniform it's know generally runway where is any maybe a of the there kind of your mean, idea is? builder give us customers, today about kind of is what possible way an wallet over across the but customers, I to just generally there and not time? penetration I maybe And what's perspective from

Scott Culbreth

Yes.

with the thing that first that will are we've share The taking to share. is continue partnered and builders I'd say take

a our them sell-through that partnered leads fact for business. with we just better So to rate the naturally

builder each past I vast that of do with position have in each think mean that with but builders, we've majority the national business doesn't XX top the we talked the market. a in we

opportunities, with don't try share is, get you can that our the time I overall incremental gains spends team that's list explore quote entire to top that an particular value account, a we of focused to around first new the have builders. exact there markets thing new XX and on always throughout are So to national business. to

sole We tend be except to supplier in a limited not cases.

of going to So is majority that been couple demonstrating the of certainly our years. last And over to we'll the have and vast builders. again, belief they're with share really get the share continue those in take marketplace

Tim Wojs

to or way relative top business builder a big is business? how there kind the Is XX Okay. of, -- to total your direct national, builder think

Scott Culbreth

goes our XX? Maybe How let much top to restate business that. the me builder of

Tim Wojs

just I'm of -- your is other much builder to Basically, versus think yes. how builder the Yes, top builders? your business if going trying -- how about much business to the XX

Scott Culbreth

an not Yes, exact would high a percentage. to about know percentage but it to you, give that. I be don't

Tim Wojs

Okay.

And over then, I mean, X from the a to changed good. perspective I months months? mix the is perspective, that guess, within just X anything has business there from a Okay, mix last

Scott Culbreth

changed side. nothing mix on No, substantially the

Tim Wojs

seem then come like last seeing And kind explicitly and it hardwood. 'XX, bit, about Okay. you have one, Do some a the deflation, just that's kind whether particle kind of in 'XX materials the thinking of board of about model fiscal little some does maybe inflation plywood of or on kind or fiscal think of down deflation? or material

Scott Culbreth

go of questions When with a again to investment able that and inflationary one and we the community, we deflationary be comments out also environment. at go that number different to budgets look back includes the to share try an to outlook and figure together a though. I'll includes our put scenarios, environment one few a plans to

when to similar the it's there's those offsetting. assumed, to So well. pricing pricing, going going to impacts. a We'll if uptick, would down are saw to ensure come there's we and Similar gain those cascade view a way the deflation on We lag modeled -- on the on we up, being end. likely front our do than as right, see but lag as going we more you slope had inflation try basically for inflationary and

Tim Wojs

Okay.

a the things main kind but around the of point to margins from those offset, so perspective, dollars perspective? a be, timing from Okay, would it of would you expect could push kind

Scott Culbreth

Exactly. it. got You

Tim Wojs

Okay.

Okay, got you. Good. Awesome.

So, thanks luck year. good the guys, and on

Scott Culbreth

Thanks, Tim.

Paul Joachimczyk

Tim. Thanks,

Operator

from is question Julio go of next The Romero Please Instructions] ahead. Sidoti. [Operator

Julio Romero

in morning. Thanks. quarter. Hey, ask margin the good the performance about to gross I wanted

point wondering operational was benefit and the on how calendar the there's much did if streamlining a way a late any to in of Just finer you put efficiencies 'XX?

Paul Joachimczyk

Julio, there that we're performance a lot of exactly, too. Yes. running improvements are that historical in the benefits normal pre-COVID of well, our that fourth to received supply chains our fiscal as our operational Not won't at we kind dial our out some there. quarter out plants operating only seeing due levels, of improvements the is were across but are in are

And about we then talked just automation. --

Some of FY say, 'XX efforts now success as hold take of, in to for kind those us up really setting well, starting too. and are

know amount, our it's taking to I you're exact performance or I are actually but not a carry future. percent and So forward an dollar are things a the know answer. for those for in looking hold going

Julio Romero

Thank you priorities, 'XX helpful generated commentary sheet expect more free much reduction Got given with thinking in opportunistic you repurchases just did in fourth quarter? and for 'XX, the the cash you then is in guys how about fiscal debt just just the balance allocation and that. And it be the your we there. The to capital should aggressive just

Scott Culbreth

we're would didn't just we be would focus do I on going in word. opportunistic. Obviously, 'XX. repurchasing that I any to say

gotten a fantastic business. on which focus done X.X deleveraging for was we've is that. this so result Our below We've times, debt,

look now look shares. got on. So plant a we'll got things through at expansion dealing you at talked that opportunistic the about, Paul and we'll with. various that then focus repurchases. we're automation we'll the And We've we've We've walked

Julio Romero

back helpful. very Really I'll much. hop queue. Thanks the in

Scott Culbreth

Thanks, Julio.

Operator

the that is [Operator I question, turn not over would a closing to Mr. Joachimczyk go for to to I comments. ask do Instructions] line Please ahead, waiting there As else see sir. like anyone

Paul Joachimczyk

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

Operator

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

You disconnect. may now

American Woodmark (AMWD) 25 May 232023 Q4 Earnings call transcript