American Woodmark shares fall 7% as quarterly earnings disappoint, outlook dims

Shares of American Woodmark Corporation declined by 7% to $93.49 during Tuesday morning trading, reflecting investor dissatisfaction after the company reported second-quarter earnings that fell short of expectations. The cabinet manufacturer also issued a cautious outlook, forecasting a decline in net sales for fiscal 2025 due to persistent challenges in the housing market.

American Woodmark, headquartered in Winchester, Virginia, reported net income of $27.7 million for the quarter ended October 31, 2024, equating to $1.79 per share. This represented a decrease from $30.3 million, or $1.85 per share, during the same period last year. Adjusted earnings, which excluded certain one-time items, reached $2.08 per share, falling short of the $2.37 anticipated by analysts surveyed by FactSet.

Lower sales and rising costs weigh on results

The company’s net sales declined by 4.5% year-over-year to $452.5 million, primarily driven by softer demand in the remodeling market and a slowdown in new single-family home construction. Chief Executive Scott Culbreth attributed the decline to macroeconomic housing headwinds and reaffirmed the company’s expectation for a low single-digit decline in net sales for the full fiscal year.

Operating pressures also took a toll on profitability. American Woodmark faced higher supply chain costs and an unfavorable adjustment to its foreign currency hedging instruments. Restructuring charges tied to workforce reductions further weighed on results. However, these were partially offset by the elimination of amortization expenses for acquired intangible assets and reduced incentive compensation compared to the prior year.

Adjusted EBITDA, a key profitability measure, fell 16.8% to $60.2 million, or 13.3% of net sales, down from $72.3 million, or 15.3% of net sales, in the same quarter last year.

Year-to-date performance and share repurchase strategy

For the first half of fiscal 2025, American Woodmark reported a 6.2% year-over-year decline in net sales, totaling $911.6 million. Net income for the period was $57.3 million, or $3.68 per share, compared to $68.2 million, or $4.13 per share, during the same timeframe last year. Adjusted EBITDA fell 16.5% to $123.1 million, or 13.5% of net sales.

The company has demonstrated a strong commitment to shareholder returns, repurchasing 620,337 shares—or 4.1% of outstanding shares—during the first half of the fiscal year for $56.5 million. American Woodmark recently secured board approval for an additional $125 million in share repurchase authorizations, further reinforcing its long-term focus on capital allocation.

Outlook remains cautious amid housing market uncertainty

Despite ongoing challenges in the housing sector, American Woodmark reaffirmed its fiscal 2025 guidance. The company expects a low single-digit decline in net sales year-over-year and an Adjusted EBITDA range of $225 million to $235 million. Culbreth noted that the firm is focused on operational improvements and cost management to navigate the difficult market environment.

Chief Financial Officer Paul Joachimczyk highlighted the company’s financial resilience, pointing to its refinancing of senior debt to enhance liquidity. He also stressed that American Woodmark is well-positioned to capitalize on a recovery in housing demand when market conditions improve.

Market reaction and future considerations

The 7% drop in American Woodmark’s stock underscores market skepticism about the company’s near-term prospects. While strategic measures such as share buybacks and operational improvements signal confidence in its long-term growth, investors remain wary of the persistent weakness in housing demand and rising costs.

As macroeconomic factors like interest rates and construction trends continue to shape the housing market, American Woodmark’s ability to manage costs and maintain profitability will be closely watched by analysts and investors alike.