Earnings call transcript Q1 2024

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Operator

Good day, and welcome to the American Woodmark Corporation First Fiscal Quarter 2024 Conference Call. Today's call is being recorded, August 29, 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 and the company's rationale for their usage and a reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures.

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

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

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

Paul Joachimczyk

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

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

Scott Culbreth

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

teams million, decline X.X% new down our historic build rates representing more norms the and shifting range. of sales sales of are prior Within delivered strategy. declined to to in XX% construction, ready-to-move-in prior continue a year. X.X% in business to holding buy net versus our Cancellations versus Our Builders $XXX.X the year. XX% to are drive

Difficulty] new customers. existing [Technical with and

rates versus was prior our versus consumers the have are our Within and and home year. and slowed traffic projects. stock to dealer X.X% and lower Demand businesses, which the kitchen home down distributor trends revenue this, remodel, our in-store declined business year. Looking XX.X% center smaller-sized includes choosing center business made-to-order for at due prior independent

customers. impacted that by was destocking efforts promo prior more by our Our was versus at inventory stock a the offset than bath positively business year, but

our year. the to the business, improved X.X% the up for prior end regards of first fiscal fiscal With stronger in prior versus allowing trends order the dealer/distributor Incoming quarter, were quarter. we at shipments

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

ops Our in plans. drive to team continues our excellence

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

fiscal in Our our our view repair outlook construction slightly original in with new assumed changed, And view and is declines year not model. softer and but for we has ‘XX demand outlook new repair better demand and construction. versus do market model both

expectation for range EBITDA million. fiscal remains strong with first low a quarter $XXX $XXX sales to adjusted Due a the our is Our increasing unchanged to to expectation double-digit performance, million of decline.

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

our our to area go-live. last the from implementation efforts launch styles, quarter and door for organization several of new the our fiscal that new summer enhancements Monterrey include transformation over design next our ERP benefiting is within included conclusion Growth Digital platform. accessories the workshops of made-order internal finishes global and

in of Our Hamlet, panels in the September. the by be channel in Carolina. and CRM are across channel wall Mexico, wall and is new North accelerating with followed the over will went remodel all XX% installed live design construction work August panels Monterrey, tool of Platform in the installed

XX roof in be sites days. both to on expect our the We next

team In closing, 'XX. fiscal their has additional continuing and accomplished and bath what As the our during fiscal to cabinetry in deliver stock our proud in year will reminder, lines. capacity contributions first forward a this product I kitchen of quarter, expansion look I'm

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

Paul Joachimczyk

first million, over sales the year Thank fiscal center representing sales of XXXX for dealer of you, the last increasing combined were for X.X% and home centers $XXX.X dealer decrease quarter and the a same The X.X%. with X.X% and fiscal year. XX.X% independent decreased quarter, distributor Scott. distributor net Net home period first decreasing

margin year. basis versus current charge matching impacted last to first profit facilities of of fiscal net XX% for in gross X.X% the a better fiscal margin sales the stability incurred of first XXXX improvements to in same compared supply in the by in point the prior decreased year inflationary representing reported was of the year, quarter net offset construction operational tariff New million impacts, our first sales year The quarter, the in the positively pricing, partially quarter by manufacturing quarter company's XX%, chain, XXX fiscal within the Gross the our improvement. was $X.X quarter. and

are of previous discussed we our QX normal performance to our our As performance earnings industry. and we are higher fiscal levels call, at QX for to due returning cycles our in the seasonality

income of expenses restructuring charges same our period was year of net diluted fiscal year or sales fiscal incentives, XXXX. increased XXX of any XX% quarter million first Adjusted spend. diluted $XX.X exclusive ratio of year compared fiscal points versus XXXX in the in XXXX year. the was share quarter profit $X.XX in sharing operating of share for due basis net of with per $X.XX and net $XX.X or Total digital sales million first last The XX.X% increases the per to

Adjusted million XXX quarter compared representing XXXX of for sales we sales had gain the million our $XX.X $XX.X year net that or of to EBITDA fourth of fiscal was the quarter year-over-year of year or in and performance net first of fiscal prior XXXX. improvement same XX.X% basis fiscal year, for point matching XX.X% the fiscal quarter the a

case company's plywood the included. and in X Vietnamese the were suppliers final determination Commerce made plywood a

We million Within the the a determination. pretax charge. vigorously appeal to quarter, we took plan $X.X

However, to time take recover. this will

context, For in June with supplier new was last of our order placed XXXX.

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

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

X.XXx XXXX, the year. quarter the first X.XXx from was at of -- representing the X.Xx in fiscal improvement the adjusted a end leverage EBITDA prior Net fiscal first quarter

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

remaining the shares X% company the The current being repurchase retired. is million of share repurchasing first purchased $XX.X or XX.X representing about Under in million. outstanding XXX,XXX authorization program, shares quarter, share the

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

XXXX prior the due positive our to of outlook performance XXXX. to a is year million. outlook expectation increase stabilized we and to $XXX increased in fiscal our million range the operational from $XXX is being start to EBITDA The for Our $XX had fiscal year million our expected

as Reiterating in The results year. we have total -- year of our negatively Monterrey, our as operational is we still the outlook without revenue will approximately locations of be we those impact impact will charges these full offsetting are XXXX. in from $X.X full million on of incurring Mexico and the starting locations. the fiscal expenses the track North new past This quarter, for Carolina, operational Hamlet, this performance fiscal

year Our unchanged. fiscal capital XXXX allocation priorities for remain

will Carolina our in on the investments investing be in and investing on We digital And expansions automation CRM transformation our and path with our plant efforts. Hamlet, the back Monterrey, our solutions. for first continuing North in ERP lastly, Mexico, focused business into

our share Next, repurchasing. we'll continue

we debt we to $XX.X paying be a a we in And wanted we have our and achieve, reminder, remaining. As net have at XXXX. will year still leverage position million fiscal ratio debt lastly, deprioritizing

the off continued our the has achieve results in I'm strategy. alignment year. expect is through and happen to made the the fully this and continues This accomplished are commitment, our business In make invest their through We it year. daily. closing, They ones to throughout fiscal to team hard company the team of efforts. improvements the GDP financials American to the the testament read for the employees build direct a to past for these Woodmark all what members our at the who thank work progress efforts grateful and

We'll any remarks. This questions Difficulty] answer [Technical happy be concludes to prepared our

Operator

comes question Romero first & Please ahead. go At [Operator Sidoti time, Our Instructions] this Julio with from Company.

Julio Romero

start construction outlook, about I you R&R on new about Does maybe sales volume remodel traffic home the but little bit projects. just a guess [Technical worse Can Difficulty] in-store you And maybe a remodel? what's mentioned So can repair guide, better little smaller-sized mean outlook. you driving less talk bit selling rates? and just talk you're that lower just per side? You the about talked

Scott Culbreth

couple a of there. in take I'll Sure. questions just

from trending range came just expectations Nationally we're channels. showed our say weeks. XX. mid-single centers sales comp. to low-double-digits, high-single-digits our want in And been yet in starts was an source, to at both it's outlook down depending talk And averaged expecting the data we ‘XX, of range. don't point. shared January has digits. in to category most we in see But below starts then average first the quarter particular of into single-family I to for performing July store that looking July, calendar would Let's recent their and remodel, widened mid-single-digit last step that just certainly, two as with about at the think this Home that out They reported the 'XX XX%. about on decline year they're I down

outlets attribute They then and one, factors: the just two in slowing jobs. also smaller that did to traffic

business two had We going the just look last same a taking we're ultimately, all and that quarter. forward. channels us, for the our reallocation think guide as it's So but consideration projections we we sales into at between

Julio Romero

I continue how lower? to your the for levels the Okay. color rest free impressive sense about the of the what's they do ask first the inventory Maybe just wanted was flow about think then pretty And of appreciate quarter. overall cash for flow Should just And cash trend to year? you today? there. figure, which free

Paul Joachimczyk

have lack first for in we're part kind than get room off of efforts anticipated of we Julio, on avenues cash starting a we to these of continue inventories desire stabilized. But manufacturing still online our regards the some those We year. have that. outperformance. free strong of flows still we our stronger the also, and Yes. primarily to the not our coming much delays free year, in have our timing improvement cash that, going facilities just in really, to But we the flow started not from do with but to will a due projects, OEMs, for to have

Julio Romero

guys. helpful. Really lot a Thanks

Paul Joachimczyk

Yes, thanks.

Operator

ahead. next Zelman. Our from Baumgarten question with Please comes Adam go

Adam Baumgarten

know cost balance Hey, input the I what guys guess just side. for of but expecting on of I the on good fiscal kind afternoon. the that, just don't you touched you're if year?

Scott Culbreth

Yes.

point, at are On hardwood lumber this relief we the in specifically. inflation seeing side,

calendar Certainly, So changing be end see year-over-year cost we upward continues domestic our end now standpoint, and still Don't with that even year. along of the to other hardware. plywood, input the a increasing we've fiscal an materially and such there. the labor, declines of between seen as categories really on But pressure see transportation. year, paint from right,

Adam Baumgarten

the how it. and activity R&R Got just side, then that's maybe trending. kind softness And Okay. about talk the on in of the promotional on just

Scott Culbreth

activity. Yes. We've seen slight promo in a uptick

quarter, well messaged the principally remodel last I the space again, as in channel, the center. both distributor think we as so home same in the dealer

of uptick, So a slight concern. but nothing

Adam Baumgarten

a about kind good normal, it? think like of back So it is to to way

Scott Culbreth

still would norm. the below it's historic say I

Adam Baumgarten

got Okay, you. Thank it.

Operator

Next Please question Ramsey with Group. ahead. Steven from go Thompson comes Research

Steven Ramsey

margin And being On the you walk quarter, on then in evening. those rest that of drivers the of good the there. margins evolving order called of just Hi, again drivers? maybe how for the Could you the magnitude, strong gross consecutive order quarter? helping you out drivers gross going the year through through see the second maybe magnitude on

Paul Joachimczyk

question. about pricing good inflation. matching we talked Steven, better Yes, Really,

out have to commentary So that's we of that really caught up kind there.

overall really perspective, you magnitude their together. our so as there, the the say, matching Then chain X there. first increases are stack back is first efficiencies, foremost our hand, of with it did plant the, to cadences chain. I'd hand two kind stabilized, from from stability those that's other our and and to then from which get supply being So X does that supply combined we out look And of efficiencies. our normal the opportunities out at a are really Those allow work two operating better operations operational in that those

Scott Culbreth

I Then tell the a on increases piece, we that that you year is only really into we've would the that to just put pricing ago. I thing the business the add lapped would

So expecting pricing going gains benefit forward. not additional to we're in year-over-year

Steven Ramsey

new Okay. goes that a year, away outlook year pressure about of the or facilities Helpful. down on on is the to or cost of And million that talk spend. or so, then the the completely markets normalize over that next this steps maybe kind as $X

Scott Culbreth

start-up It's and Yes. basically the cost. ramp-up

don't a have paying and start fully lease you You it utilized.

going better facilities utilize an forward. our So leverage we'll impact. is charge we of to do that both this And as then those start and expectation take that year

Steven Ramsey

you. Okay, Thank helpful.

Operator

Jefferies. next The go Collin Please with comes ahead. Verron question from

Collin Verron

and with the driving the basis to for to be that. the point the previous just Or improvements? operational around you Backing -- of from some EBITDA quarter is raw us a material some for just color looking margin what's Is going back questions. thanks it are my to Can more the all into start on taking you wanted the lower increase margin give or costs? increase your guide. numbers it drivers detail guide? Great I XXX in seeing Just some more in guide.

Scott Culbreth

assumed we in was we take gave contributor really factories. our piece would and Paul's the modeled being and moment outlook a ago. that we what a to than it run the quarter how I'd Certainly, pricing key impact ago as a when had that well year of back better Yes, as mentioned, he be first of comment a as

well. we As we our expect go continue forward, to run to factories

that take softer we've So expect forward. confident when equation. a factored got to that But for put we got our of increase demand the and upside out some those there of as an we're offset We considerations together, we we've bit go overall think in that, we do as the with for all range. we've

Collin Verron

Okay, in see in of the through as that's of the And margins And year, about of bottoming? the the then any that you thinking margin helpful. the rest terms shape EBITDA help performance year? where

Scott Culbreth

QX view. sales We comp that by how only don't our on really, far into I specifically ago. EBITDA. a strongest a year. quarterly the give prior was considerable So frankly, outlook the I to just on thing or our ago, recall we want view That's comment quite full-year and backlog get was sales The in a will Why reducing year made away that? year headway in is

So think as as of fiscal year quarter this be a a bit would that a we upcoming reminder, about tailwind just 'XX.

Collin Verron

then the last Great. That's And just one for helpful here color. me.

home for this quarter? where about perspective centers. of think just from inventory about talk talked the a that that You after And quarter? destocking some you the channel was Can is headwind at guys how in guys you an much you

Scott Culbreth

call accounts have even opportunity levels of I'll we at but increases both to believe for the both in-store an in kitchen, Collin, help our quite there's that, inventory category. I a that key to specific storage out see bath, frankly, amount

So our product able hand driving can so get our with that improvement to teams our hand customers we stock in be that in-consumers that in work purchase. we on to assure rates

Collin Verron

year. rest and with the you thank good the Great, of luck

Paul Joachimczyk

you. thank Okay,

Scott Culbreth

Collin. you, Thank

Operator

from [Operator Our Instructions] with go Baird. next Wojs Please Tim question comes ahead.

Tim Wojs

a prior just kind Scott, you Maybe inventory kind year first last conversion in headwind you my of of Did these are that your [Indiscernible]. your the afternoon, backlog tailwind? Good say, of the year? guys. Hey, last are from on answer just did question, one to mean

Scott Culbreth

compare comment, the prior a you backlog. when sorry, year specifically, prior had to of through of QX year or So amount clarify to to that chew benefit able substantial -- being a had we pretty

have will We not that this year.

year last year. So tailwind a there's a repeat this headwind. Thus, doesn't itself that it's

that for being clear Sorry not time. first

Tim Wojs

the guess And have of I differences within No, Got seeing kind the builders make -- terms then to or you based of size on confidence that. builder. any order -- business, that of mean, sure activity I are kind is in just I on yes. just I based your Okay. heard of that the there your builder want

work do builders you to But larger the of ones? some how Just think you lot of contrast trying kind to a kind some -- larger with builders. compare and I would know of of of smaller the the

Scott Culbreth

Yes. All the accurate. statements you all made are

the there's a not Tim, but of So also range. the region. wide only And it's specifically, a builder factor

was down. as late. So start to of we've West seen That the area out last of rotate some of weakness country the sort to

back. We expect come that to

bullish for the ago. depending builders and where varies I pretty to on six the as they it So larger account, opposed now but their three say would year are expectations were the on months

Tim Wojs

Good. of how out of to about over chain know kind would construction kind think okay. kind comparing Okay, kind about we time that would of of or perspective, relative starts you supply a years. XXX-day kind couple I back then you of to starts And of to the or of lagging think revert the got XX the as from the lead think market? completion. had to that lag kind last of But lag new we now with

Scott Culbreth

that think, all historic that up, go and back wouldn't moving the quote certainly XX Paul I roughly norm. I would to saw XX increase We days. way the to

weather, in get that creates things that's Southern labor some also some that by has years, on to Then time. We complete California we're on disruptions of being homes of some historic Over and certainly coming shrunk. back the time the I the cycle able But to think the market market, hear West that past like we specifically at down again, build still yet. get challenges, that report get builders you couple don't difficulty you that about see even pockets builders of status. to creating to norms out

Tim Wojs

okay, Thanks Okay, Very time, guys. for good. luck. Good very the good.

Scott Culbreth

Thank you, Tim.

Operator

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

Paul Joachimczyk

[Technical no call. there this additional you taking concludes Difficulty] questions, Since for our are Thank

Operator

now may disconnect. You Difficulty] [Technical

American Woodmark (AMWD) 29 Aug 232024 Q1 Earnings call transcript