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AMERICAN WOODMARK CORP (AMWD)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY2025 net sales were $452.5M, down 4.5% YoY; GAAP EPS was $1.79 and adjusted EPS $2.08, with adjusted EBITDA at $60.2M (13.3% margin). Management tightened FY2025 adjusted EBITDA guidance to $225–$235M while reaffirming a low single-digit decline in net sales for the year .
  • The quarter reflected softer remodel demand and slower summer single-family starts; new construction units were positive but price/mix was negative, and gross margin fell to 18.9% (from 21.8% YoY) on volume deleverage and higher input costs .
  • Capital allocation remained active: the Board authorized an additional $125M repurchase program; Q2 buybacks were 348,877 shares ($32.5M), bringing YTD repurchases to 620,337 shares ($56.5M) .
  • Strategic execution continued across ERP rollout (West Coast go-live planning), automation, and distribution rebranding (“1951 Cabinetry” conversion ~80% complete), supporting long-term efficiencies and share gains .

What Went Well and What Went Wrong

What Went Well

  • Operational execution sustained profitability despite demand headwinds; adjusted EBITDA margin of 13.3% was in line with expectations shared last quarter .
  • Strategic initiatives advanced: ERP planning for West Coast made-to-stock facility, ongoing automation, and ramp in Monterrey (Mexico) and Hamlet (NC); distribution rebrand conversion ~80% complete to 1951 Cabinetry .
  • Active capital returns: $32.5M repurchases in Q2; Board approved an incremental $125M authorization, reinforcing confidence in long-term positioning .
    “Our team delivered net sales and Adjusted EBITDA performance that was in-line with the expectations we shared last quarter.” — CEO Scott Culbreth .

What Went Wrong

  • Remodel channel weakness and slower summer single-family starts pressured volumes; home center demand remains under macro pressure in higher-priced projects; each channel down in the period .
  • Gross margin compressed to 18.9% (-290 bps YoY) on unfavorable fixed cost leverage and rising raw materials, labor, and freight; adjusted EBITDA fell 16.8% YoY .
  • “Other expense” included unfavorable mark-to-market on FX hedges; management also noted restructuring and debt refinancing costs in the quarter, weighing on EPS and profitability .

Financial Results

Quarterly performance vs prior periods (oldest → newest)

MetricQ4 2024Q1 2025Q2 2025
Net Sales ($USD Millions)$453.3 $459.1 $452.5
GAAP EPS ($)$1.69 $1.89 $1.79
Adjusted EPS ($)$1.78 $1.89 $2.08
Gross Margin (%)18.6% 20.2% 18.9%
Adjusted EBITDA ($USD Millions)$54.7 $62.9 $60.2
Adjusted EBITDA Margin (%)12.1% 13.7% 13.3%

Q2 2025 YoY comparison and estimates

MetricQ2 2024Q2 2025S&P Global ConsensusSurprise vs Consensus
Net Sales ($USD Millions)$473.9 $452.5 Unavailable*n/a
GAAP EPS ($)$1.85 $1.79 Unavailable*n/a
Adjusted EPS ($)$2.50 $2.08 Unavailable*n/a
Adjusted EBITDA ($USD Millions)$72.3 $60.2 Unavailable*n/a

*Values retrieved from S&P Global; consensus was unavailable at time of request.

Channel/Segment indications

ChannelQ4 2024Q1 2025Q2 2025
New Construction-1.5% YoY Softer back-half expected; early-quarter demand exceeded plan Units up; price/mix down; channel down overall
Home Center-10% YoY Weaker demand; larger discretionary projects under pressure Down; macro pressures persist
Dealer/Distributor-5% YoY Price increase announced 10/1 in dealer channel No further pricing yet; ongoing monthly evaluation

KPIs and balance sheet

KPIQ1 2025Q2 2025YTD FY2025
Free Cash Flow ($USD Millions)$29.4 $0.7 $30.1
Cash & Cash Equivalents ($USD Millions)$89.3 $56.7 n/a
Revolver Availability ($USD Millions)$322.9 $313.2 n/a
Net Leverage (TTM) (x)1.19x 1.40x n/a
Shares Repurchased (Count / $USD Millions)271,460 / $24.0 348,877 / $32.5 620,337 / $56.5
Renewable Energy Tax Credits Purchasedn/a$17.7M (to offset Q4 corporate taxes) n/a

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (YoY)FY2025Low single-digit decline Low single-digit decline (reaffirmed) Maintained
Adjusted EBITDA ($USD Millions)FY2025$225–$245 $225–$235 Tightened/Lowered midpoint
Quarterly GuidanceFY2025Company does not provide quarterly guidance Reminder: Q3 has fewer sales days; lowest sales quarter Informational
Capital ReturnsFY2025$65.4M remaining authorization at Q1 New $125M authorization added (11/20/24) Increased buyback capacity

Earnings Call Themes & Trends

TopicQ4 2024 (prior-2)Q1 2025 (prior-1)Q2 2025 (current)Trend
Macro rates & demandImproving starts; remodel soft Remodel soft; back-half uncertainty; rate cuts needed Remodel remains soft; summer starts slowed; mortgage rates up; cautious outlook Cautious; rate-sensitive
Pricing actionsPromotions consistent YoY Dealer price increase announced; evaluate monthly No incremental pricing yet; monthly review continues Tactical pricing discipline
Input costsStartup costs; stable supply chain Logistics/raw materials/labor inflation; particle board noted Raw materials, labor, final-mile delivery pressure; linerboard inflation Cost inflation persistent
Tariffs/regulatoryNo specific calloutsNone specificElevated tariff policy uncertainty (Mexico/Canada); mitigation via sourcing/pricing Policy risk rising
ERP/digitalERP journey outlined; multi-year West Coast ERP go-live planned Planning ongoing; on track for West Coast Execution progressing
Automation/PlatformCapacity ramp (Monterrey/Hamlet) Continuing ramp & automation Continued ramp and automation progress Ongoing efficiency build
Channel share gainsMore aggressive with capacity Stock kitchen/bath wins (~$30M annualized) load-ins begin Stock wins load-ins nearly complete; pursuing new accounts Share initiatives advancing
Capital allocationBuybacks, leverage 1.14x Ongoing repurchases; debt repayments deprioritized $32.5M Q2 buybacks; +$125M authorization Continued buybacks

Management Commentary

  • “Our adjusted EBITDA results were $60.2 million or 13.3% for the quarter. Reported EPS was $1.79…more than offset by lower sales, restructuring costs… and a mark-to-market entry for peso hedging” — CEO Scott Culbreth .
  • “Gross profit… decreased 290 basis… Lower sales volumes… combined with increasing product input costs… partially offset by our sustained operating excellence efforts.” — CFO Paul Joachimczyk .
  • “Digital transformation efforts continue… planning for our ERP Go Live at our West Coast made to stock facility next year.” — CEO Scott Culbreth .
  • “We expect the demand trends to remain challenging but are reaffirming… low single-digit decline in net sales… tightened our Adjusted EBITDA range to $225 million to $235 million.” — CEO Scott Culbreth .

Q&A Highlights

  • Tariffs and supply chain: Management flagged uncertainty regarding potential tariffs on Mexico/Canada and reiterated confidence in resourcing and pricing levers to mitigate impacts .
  • Pricing cadence: Dealer channel price increase effective 10/1; other channels under review with monthly triggers based on input cost trends .
  • Sales outlook: Maintained low single-digit decline view for FY2025; second-half tailwinds expected from pricing actions, stock kitchen/bath wins, and easier comps; no assumption of material macro improvement .
  • Input costs: Continued inflation in particle board, labor, final-mile delivery; recent linerboard inflation noted .
  • Cash flow: Free cash flow expected to be consistent with performance; working capital pressure from inventory positioning around port strikes/Chinese New Year .
  • Weather: Southeast hurricanes caused timing issues in new construction; no material Q3 impact expected .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 FY2025 EPS/revenue was unavailable at the time of this analysis due to data access limits; as a result, no beat/miss determination vs consensus can be provided at this time (S&P Global consensus unavailable)*.
  • Given tightened FY2025 adjusted EBITDA guidance ($225–$235M), estimates may drift lower on margin expectations, with near-term revisions likely to reflect remodel demand softness and cost inflation .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Mix and margin: Gross margin compression (18.9%) and lower adjusted EBITDA reflect volume deleverage and cost inflation; expect continued margin sensitivity until remodel demand stabilizes .
  • Near-term catalysts: $125M incremental buyback authorization and ongoing repurchases ($32.5M in Q2) provide support amid macro uncertainty .
  • Execution offset: ERP and automation programs should yield multi-year efficiency gains; stock kitchen/bath wins and distribution rebrand support share growth into FY2026 .
  • Guidance risk: EBITDA range tightened to $225–$235M; watch input cost trajectory (particle board, labor, delivery) and promotional cadence for additional pressure .
  • Macro sensitivity: Management embeds cautious assumptions; upside hinges on sustained rate declines, improved consumer confidence, and stabilization in tariff policy .
  • Trading implications: In the absence of consensus signals, price reaction likely tied to margin/FCF resilience and buyback activity; monitor Q3 seasonality (fewest sales days) and inventory working capital dynamics .
  • Medium-term thesis: Capacity investments and digital transformation should position AMWD to outperform on recovery in remodel/new construction; continued share gains and cost efficiencies are key to re-expanding margins .