Executive Summary

Q3 FY2025 underwhelmed internal expectations: revenue $397.6M (-5.8% y/y), GAAP EPS $1.09, Adjusted EPS $1.05, and Adjusted EBITDA $38.4M (9.7%). Margin pressure stemmed from softer remodel demand, weaker new construction activity, unfavorable mix, higher input costs, and unscheduled down days around the holidays .
Guidance cut: FY2025 net sales now expected to decline mid-single digits (from low-single digits), and Adjusted EBITDA reduced to $210–$215M (from $225–$235M previously) .
End-market color: repair & remodel down 2.3% y/y; new construction down 10.4% y/y with rotation to lower-end products; home center made-to-order roughly flat; stock kitchen up mid-single digits; distribution channel down double digits .
Strategic actions/capacity: Orange, VA component plant closure (pre-tax restructuring costs $6.0–$8.5M) consolidates into Monticello, KY and Moorefield, WV; distribution rebrand conversion to “1951 Cabinetry” completed; ERP go-live at West Coast made-to-stock facility targeted for first week of May; continued buybacks (Q3: ~132k shares, $12.6M) .
Potential stock catalysts: guidance reduction and tariff risk (China exposure < $25M spend, Mexico supports ~10% of revenue) likely force pricing decisions; management evaluating list price changes vs surcharges by channel if impacts cannot be mitigated .

What Went Well and What Went Wrong

What Went Well

SG&A leverage improved: total SG&A including restructuring dropped to 9.6% of net sales vs 12.6% last year, helped by amortization roll-off, lower incentives, and cost control .
Channel bright spots: home center made-to-order roughly flat; stock kitchen up mid-single digits; dealer channel roughly flat, suggesting share stability amidst weak demand .
Strategic/operational execution: 1951 Cabinetry brand conversion completed; ERP go-live targeted early May; CEO: “our teams continue to execute and have built a platform to deliver profitable growth when macroeconomic conditions improve” .

What Went Wrong

Gross margin compression: gross margin fell 420 bps to 15.0% (from 19.2%) on volume deleverage, higher raw materials, labor, and freight; Adjusted EBITDA margin dropped to 9.7% (from 12.0%) .
New construction softness and unfavorable mix: new construction down 10.4% y/y with rotation from “best” to “better/good” and fewer cabinets per home as builders optimize affordability .
Production scheduling impact: unscheduled down days around holidays to manage backlog contributed to deleverage and margin pressure .

Financial Results

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($M)	$422.1	$459.1	$452.5	$397.6
Revenue YoY Change	—	-7.9%	-4.5%	-5.8%
GAAP EPS ($)	$1.32	$1.89	$1.79	$1.09
Adjusted EPS ($)	$1.56	$1.89	$2.08	$1.05
Gross Margin (%)	19.2%	20.2%	18.9%	15.0%
Adjusted EBITDA ($M)	$50.6	$62.9	$60.2	$38.4
Adjusted EBITDA Margin (%)	12.0%	13.7%	13.3%	9.7%
Net Income Margin (%)	5.0%	6.5%	6.1%	4.2%
Operating Income ($M)	$27.9	$47.0	$42.6	$21.1

Segment/channel performance (Q3 FY2025):

New construction net sales: -10.4% y/y
Repair & Remodel net sales: -2.3% y/y
Home centers: -0.6% y/y; made-to-order roughly flat; stock kitchen up mid-single digits
Independent dealer/distributor: -6.8% y/y; dealer roughly flat; distribution down double digits
Regional: growth in Northeast and Northern California; double-digit declines in Atlanta, Florida, Southern California

KPIs and liquidity

Metric	Q1 2025	Q2 2025	Q3 2025
Cash from Operations ($M)	$40.8	$11.9	$11.0
Free Cash Flow ($M)	$29.4	$0.7	$1.4
Share Repurchases (Shares / $M)	271,460 / $24.0	348,877 / $32.5	132,075 / $12.6
Cash & Equivalents ($M, end)	$89.3	$56.7	$43.5
Revolver Availability ($M, end)	$322.9	$313.2	$314.2
Net Leverage (x, TTM)	1.19	1.40	1.53

Guidance Changes

Metric	Period	Q1 FY2025 Guidance	Q2 FY2025 Guidance	Q3 FY2025 Guidance	Change
Net Sales (YoY)	FY2025	Low single-digit decline	Low single-digit decline	Mid single-digit decline	Lowered
Adjusted EBITDA ($M)	FY2025	$225–$245	$225–$235	$210–$215	Lowered

Notes: Management cites continued demand challenges, manufacturing deleverage, and input-cost pressures driving the reduction; outlook excludes potential new tariff impacts and contemplates pricing actions if necessary .

Earnings Call Themes & Trends

Topic	Q1 FY2025 (Aug)	Q2 FY2025 (Nov)	Q3 FY2025 (Feb)	Trend
Pricing & tariffs	Announced dealer price increase (effective 10/1); monthly pricing reviews	Tariff policy uncertainty discussed; monthly pricing reviews continue; guide tightened	Likely single coordinated increase if tariffs hit; surcharge vs list price by channel; Mexico exposure ~10% revenue; China spend < $25M	Rising tariff risk; pricing actions more likely
Demand & mix	R&R weak; new construction slowed; FY net sales to low single-digit decline	New construction units up but price/mix negative; R&R weak; FY low single-digit decline	R&R -2.3%; new construction -10.4%; rotation to lower tiers; fewer cabs/home	Worsened in Q3
Digital transformation	ERP go-live planning underway	Salesforce optimization; ERP go-live next year at West Coast facility	ERP go-live targeted first week of May (West Coast made-to-stock)	On track
Platform/operations	Ramp Monterrey (MX) and Hamlet (NC); automation investments	Continued ramp & automation	Orange, VA component plant closure; consolidate to KY/WV	Network optimization
Regional trends	—	—	Growth in Northeast & N. California; declines in Atlanta, Florida, S. California	Mixed by region

Management Commentary

CEO tone on quarter/outlook: “Despite performance that was below our expectations for the quarter... Demand trends are expected to remain challenging, and our outlook is for a mid-single digit decline in net sales for the full fiscal year and an Adjusted EBITDA range of $210 million to $215 million.”
Platform actions: “Conversion activity is now complete with our distribution business customers converted to our new brand 1951 Cabinetry... ERP Go Live at our West Coast made-to-stock facility targeted during the first week of May.”
Mix pressure in new construction: “We definitely see a rotation down... from best to better and sometimes better to good... sequentially, we are seeing a downward trend in the number of cabinets going into a home.”
Tariffs/pricing stance: “If tariffs do come through and we're not able to fully mitigate, there's likely going to be pricing action... could be a surcharge [mechanism]... but you have to justify to get the actual price increase.”

Q&A Highlights

Guidance bridge: Demand headwinds in both R&R and builder inventory reductions drove the comp; Q4 environment assumed similar; full-year mid-single-digit decline reiterated .
Tariff exposure and actions: Mexico facilities support ~10% of revenue; if tariffs persist, optimization and pricing actions would be considered; current outlook excludes potential new tariffs .
Pricing cadence: Preference for one coordinated price move rather than multiple small increases; channel-specific mechanics (dealer list price; home center cost-justification) .
Orange, VA plant closure benefits: Savings to be incorporated into FY2026 outlook; details to come next call .
Disaster impacts: Modest positive comps in hurricane-impacted Florida stores; not material to overall quarter .

Estimates Context

Wall Street consensus (S&P Global) for Q3 FY2025 EPS, revenue, and EBITDA could not be retrieved in this session due to an S&P Global API rate limit; as a result, we cannot quantify beat/miss versus consensus for Q3 at this time. We will update when access is restored.
Directionally, FY guidance reductions (net sales to mid-single-digit decline and Adjusted EBITDA to $210–$215M) imply sell-side estimates for FY2025 likely need to move lower for both revenue and EBITDA .

Key Takeaways for Investors

Q3 print highlighted cyclical pressures: revenue -5.8% y/y, gross margin 15.0%, and Adj. EBITDA margin 9.7%—reflecting volume deleverage, unfavorable mix, and higher input costs .
FY guide cut is the headline: net sales to decline mid-single digits and Adjusted EBITDA to $210–$215M; this likely drives negative estimate revisions and could pressure near-term sentiment until demand stabilizes .
Watch tariffs and pricing: management’s readiness to implement price increases if tariffs hit (especially Mexico exposure) is a key swing factor for margins in H2/FY26; execution path varies by channel .
Operational actions continue: Orange, VA component plant closure should support network efficiency into FY26; ERP go-live and distribution rebrand are on track, supporting long-term productivity and growth .
Channel/region signals: stock kitchen strength and home center made-to-order stability help offset distribution/new construction softness; Northeast and Northern California outperformed while Southeast lagged .
Capital deployment remains shareholder-friendly: continued repurchases (5.0% of shares retired YTD through Q3); liquidity intact with $43.5M cash and $314.2M revolver availability; net leverage 1.53x .
Setup: management’s narrative suggests potential bottoming in R&R with improvement more likely in back half of calendar 2025; near-term catalysts include tariff clarity and any observable rebound in housing activity .

Appendix: Additional Data

Cash Flow and Capital Allocation

Q3 (quarter) cash from operations $11.0M; free cash flow $1.4M .
Nine months YTD: CFO $63.7M; FCF $31.5M; $69.1M buybacks (5.0% shares) .
Debt & liquidity (1/31/25): Cash $43.5M; Term loan $198.8M; Revolver draw $173.4M; Revolver availability $314.2M .
Net leverage 1.53x TTM Adjusted EBITDA, net debt $331.9M .

All citations:

Q3 FY2025 8-K 2.02 press release and exhibits
Q3 FY2025 earnings call transcript
Q2 FY2025 8-K and call
Q1 FY2025 8-K and call

AMERICAN WOODMARK CORP (AMWD)·Q3 2025 Earnings Summary