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American Woodmark (NASDAQ:AMWD) Delivers Solid Q4 Results, Outlines Promising Fiscal 2025 Outlook
Published on September 24, 2024 | Ticker: AMWD

American Woodmark Corporation, a leading manufacturer and distributor of kitchen, bath, and home organization products, has reported its fourth quarter and full-year fiscal 2024 results, showcasing the company's resilience and strategic execution amidst a challenging market environment.

Financials

For the fourth quarter of fiscal 2024, the company reported net sales of $453.3 million, a decrease of 5.8% compared to the prior year period. This performance exceeded the guidance range provided during the previous quarter. Within the new construction segment, net sales declined 1.5% year-over-year, while the remodel segment, which includes home center and independent dealer and distributor businesses, saw an 8.6% decline.

Looking at the full fiscal year 2024, American Woodmark reported net sales of $1.85 billion, a decrease of 10.6% compared to the prior year. The company's new construction net sales declined 7.7% for the fiscal year, while the remodel segment saw a 12.6% decrease, with home centers down 13.9% and dealer distributors down 9.1%.

Despite the top-line challenges, the company demonstrated strong operational execution, with gross profit margin expanding 310 basis points to 20.4% for the full fiscal year. This was driven by improved leverage of the fixed cost base, operational enhancements, and better alignment of input costs with pricing. However, the second half of the year was impacted by one-time start-up costs associated with the company's new facilities in Monterrey, Mexico and Hamlet, North Carolina.

On the bottom line, American Woodmark reported annual net income of $116.2 million and adjusted EBITDA of $252.8 million, or 13.7% of net sales, representing a 210-basis point improvement over the prior year. The company's free cash flow for the year totaled $138.5 million.

Outlook

Looking ahead to fiscal 2025, the company expects to see low single-digit growth in net sales across all channels. The outlook for adjusted EBITDA is in the range of $235 million to $255 million, as the company continues to invest in digital transformation initiatives, including ERP and CRM system upgrades, as well as automation and engineering resources to drive long-term operational efficiency.

Business Overview

In terms of the company's strategic priorities, American Woodmark remains focused on three key pillars: growth, digital transformation, and platform design. Under the growth pillar, the company launched a new low-SKU, high-value offering for home centers and a new distribution brand, 1951 Cabinetry, to serve its dealer and distribution network. On the digital front, the company implemented a new CRM solution across all channels and is planning the next phase of its ERP system rollout. From a platform design perspective, the company opened its new facility in Monterrey, Mexico and expanded its Hamlet, North Carolina location, enhancing its component operations and stock, bath, and kitchen capabilities.

Geographically, the company does not provide specific breakdowns, but its operations span the United States and Mexico, with 18 manufacturing facilities, eight primary service centers, and one distribution center. The company's customer base includes home centers, builders, and independent dealers and distributors.

Liquidity

American Woodmark ended the fiscal year with $87.4 million in cash and $322.9 million of available capacity under its revolving credit facility. The company's net leverage ratio improved to 1.14 times adjusted EBITDA, down from 1.37 times in the prior year.

The company's capital allocation priorities for fiscal 2025 include investing in the business through digital transformation initiatives and automation, opportunistic share repurchases, and deprioritizing debt repayments given its improved leverage position.

Conclusion

Overall, American Woodmark has demonstrated its ability to navigate a challenging market environment, leveraging its operational excellence and strategic initiatives to drive improved profitability. The company's fiscal 2025 outlook suggests continued progress, as it invests in the future of the business while maintaining a strong financial position. Investors will be closely watching the company's execution on its growth, digital, and platform design strategies in the year ahead.

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