American Woodmark Corporation (AMWD) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals several negative factors: a significant decline in net sales and adjusted EBITDA, increased leverage, and reduced free cash flow. The market strategy and financial health are concerning due to high interest rates and supply chain risks. Although there is a share repurchase program, the overall financial performance is weak, and management's lack of clarity in the Q&A adds uncertainty. Given the company's small-cap status, these issues are likely to result in a stock price decline of -2% to -8% over the next two weeks.
Key Financial Performance
Net Sales $397.6 million, a decline of 5.8% year-over-year due to softer demand in the remodel market and a solid decline in new construction single-family activity.
Adjusted EBITDA $38.4 million or 9.7%, down from $50.6 million or 12% year-over-year, representing a 230 basis point decline due to lower sales and higher material labor costs.
Gross Profit Margin 15%, decreased by 420 basis points from 19.2% last year, impacted by lower sales volumes and increased product input costs.
Adjusted Net Income $15.9 million or $1.05 per diluted share, down from $25.1 million or $1.56 per diluted share last year, primarily due to lower sales.
Free Cash Flow $31.5 million year-to-date, down from $131.7 million in the prior year, primarily due to changes in operating cash flows, higher inventory, and digital transformation costs.
Net Leverage 1.53x adjusted EBITDA, compared to 1.05x last year, indicating increased leverage due to lower EBITDA.
Share Repurchase $69.1 million or 752,000 shares repurchased in the first 9 months of the fiscal year, representing about 5% of outstanding shares.
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Operating Highlights
New Product Launches: Upcoming summer launches include a warmer paint and stain made-to-order finish, new finishes and styles in the frameless and stock kitchen business, and testing new collections in the stock bath category.
Market Expansion: Growth in the Northeast and Northern California markets for new construction direct business, despite declines in Atlanta, Florida, and Southern California.
Operational Efficiencies: Closure of the Orange, Virginia manufacturing location to consolidate production into Monticello, Kentucky and Moorefield, West Virginia, improving operational efficiencies.
Production Adjustments: Adjusted production schedules to maintain appropriate backlog due to lower demand, resulting in unscheduled production down days.
Strategic Shifts: Focus on digital transformation with ERP Go Live at West Coast facility planned for May, and ongoing evaluation of supply chain to mitigate tariff impacts.
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Risk or Challenges
Sales Decline: Net sales decreased by 5.8% to $397.6 million, attributed to softer demand in the remodel market and a significant decline in new construction single-family activity.
Interest Rate Challenges: High interest rates are affecting affordability for homebuyers, leading to a slowdown in demand for higher-ticket remodel projects.
New Construction Activity: Single-family housing starts showed negative comparisons versus the prior year, particularly in key markets like Atlanta, Florida, and Southern California.
Supply Chain Risks: Concerns over tariffs, especially regarding imports from China and Mexico, could impact costs and pricing strategies.
Economic Factors: Macroeconomic concerns include declining consumer sentiment, growing inflation risks, and the absence of near-term interest rate relief.
Operational Efficiency: The closure of the Orange, Virginia manufacturing facility was a strategic decision to improve operational efficiencies amid changing market trends.
Cash Flow Decrease: Free cash flows decreased significantly by approximately $100 million due to higher inventory and digital transformation costs.
Leverage Increase: Net leverage increased to 1.53x adjusted EBITDA, compared to 1.05x the previous year, indicating higher financial risk.
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Guidance & Outlook
Strategic Initiatives: The company continues to execute its strategy focused on three main pillars: growth, digital transformation, and platform design. Recent accomplishments include the completion of conversion activities for the distribution business to the new brand 1951 Cabinetry, and the launch of new finishes and styles in the kitchen and bath categories.
Operational Efficiency: The closure of the Orange, Virginia manufacturing location is a strategic move aimed at improving operational efficiencies and aligning with market trends towards alternative materials.
Digital Transformation: The ERP Go Live at the West Coast made-to-stock facility is targeted for the first week of May, indicating ongoing efforts in digital transformation.
Revenue Expectations: Net sales are expected to decline mid-single digits for fiscal year 2025, driven by a slowdown in the new construction market and a softening repair and remodel market.
Adjusted EBITDA Projections: Projected adjusted EBITDA for fiscal year 2025 is revised to a range of $210 million to $215 million, primarily due to softening sales volumes and increased manufacturing deleverage.
Capital Allocation: The company remains committed to investing in automation and digital efforts, with any excess capital allocated for share repurchases.
Leverage Ratio: Net leverage is at 1.53x adjusted EBITDA, compared to 1.05x last year.
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Shareholder Return Plan
Share Repurchase Program: The company repurchased 132,000 shares or approximately 1% of outstanding shares in the quarter. In the first 9 months of the fiscal year, the company purchased $69.1 million or 752,000 shares, representing about 5% of the outstanding shares being retired. There is $145.4 million of share repurchase authorization remaining.
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Key Q&A
Q:What portion of your reduced guide is attributed to the slower R&R environment and builders reducing inventory?
A:Both were key contributors to the overall comp rate posted for the quarter, and the full year outlook assumes a similar operating environment in Q4.
Q:Have you begun to see any positive impacts from the hurricanes last fall or potentially the fires in Southern California?
A:In Florida, there have been some positive comps in stores in areas impacted by the hurricanes, but not material to the overall quarter result.
Q:Can you discuss your pricing considerations and options?
A:If tariffs come through and cannot be fully mitigated, pricing action is likely. The approach varies by channel, with a need for cost justification in home center accounts.
Q:Is dealer demand bottoming or stabilizing?
A:Management hopes dealer demand is bottoming out, with expectations for an increase off the floor, but no immediate surge in demand is anticipated.
Q:Can you quantify the impact of mix headwinds in new construction?
A:There is a rotation down in product offerings, with builders moving from best to better and sometimes to good, and a downward trend in the number of cabinets going into homes.
Q:What is the input cost headwind for the quarter?
A:Nothing specific to call out, but there is continued pressure on margins, and management is waiting to ascertain the impact of tariffs before triggering pricing action.
Q:What would be the annual benefit from closing the Orange facility?
A:The impact will be incorporated into the fiscal year '26 outlook, with details provided in the next call.
Q:Review of Unclear Management Responses
A:Management avoided giving a direct answer regarding the quantification of input cost headwinds and the annual benefit from closing the Orange facility, lacking specific details.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Association REALTORS
Atlanta Florida
California market
California rotation
Chief
China team
Culbreth President
ET day
Florida Southern
Group Results
Officer
Virginia
West
backlog
comp
concern
confidence increase
construction family
consumer confidence
digit decline
exposure
family activity
home sale
mix
network
order
past
production
rate relief
remodel
stock bath
stock kitchen
supply chain
tariff place
ticket
week
year
AMWD Transcript
American Woodmark Corporation (NASDAQ:AMWD) Q4 2025 Earnings Call Transcript
Unknown5-30
The earnings call reveals several negative indicators: declining net sales, reduced gross profit margins, and increased leverage ratios. Despite some operational efficiency improvements, the Q&A section highlights management's inability to provide clear guidance on revenue projections and pricing strategies, raising concerns about future growth. The market's uncertainty regarding tariffs and the company's weak revenue guidance further contribute to a negative sentiment. Given the small-cap nature of the stock, these factors are likely to result in a market reaction of -2% to -8% over the next two weeks.
Earnings call transcript: American Woodmark Q4 2025 earnings beat estimates
Unknown5-29
The company reported declines in revenue, gross profit margin, and adjusted EBITDA, with increased debt levels and leverage ratio. The Q&A revealed concerns about tariffs, cost pressures, and vague guidance on pricing and inflation impacts. Despite some operational improvements, the overall sentiment is negative due to financial declines and uncertainties. As a small-cap stock, the market is likely to react negatively to these factors, predicting a stock price movement of -2% to -8% over the next two weeks.
American Woodmark Corporation (AMWD) Q4 2025 Earnings Call Transcript
Unknown5-29
The earnings call reveals declining financial performance, with significant drops in net sales, gross profit margins, and adjusted EBITDA. Despite a share repurchase program, the negative financial metrics and increased leverage ratio outweigh positive aspects. The Q&A section highlights concerns about tariffs, inflation, and unclear future guidance. The market cap indicates a small-cap stock, suggesting strong reactions to earnings. Given the weak financial results, negative guidance, and management's evasive responses, a negative sentiment is warranted, predicting a stock price decline of -2% to -8% over the next two weeks.
American Woodmark Corporation (AMWD) Q3 2025 Earnings Call Transcript
Unknown2-27
The earnings call reveals several negative factors: a significant decline in net sales and adjusted EBITDA, increased leverage, and reduced free cash flow. The market strategy and financial health are concerning due to high interest rates and supply chain risks. Although there is a share repurchase program, the overall financial performance is weak, and management's lack of clarity in the Q&A adds uncertainty. Given the company's small-cap status, these issues are likely to result in a stock price decline of -2% to -8% over the next two weeks.
AMWD Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
