AMERICAN WOODMARK CORP Q2 FY2024 earnings call

• New construction slowdown due to macro factors but partially mitigated by builders' rate buydowns and shifts to ready-to-move-in and build-to-rent homes; aligned with top national and regional builders. • Remodel revenue declined due to lower in-store traffic and smaller projects. • Adjusted EBITDA increased due to product mix and manufacturing efficiencies. • Cash balance $96.4 million, access to $323.2 million under revolving credit facility; repurchased 394,000 shares. • Strategy pillars: growth, digital transformation, platform design; upcoming low SKU, high-value offering in home centers and new brand for distribution; ERP planning for Monterrey, website enhancements for home center, CRM implementation; platform design work in Monterrey and Hamlet with $8 million impact in FY24.

Net sales were $473.9 million, a decline of 15.6% vs prior year. New construction sales declined 11.1% due to macro factors like interest rates and housing affordability. Remodel sales, including home center and dealer/distributor, declined 18.8% and 20% respectively. Adjusted EBITDA increased 7% to $72.3 million (15.3% of net sales). New construction: down 11.1% vs prior year; Remodel home center: down 18.3% vs prior year; Remodel dealer/distributor: down 20% vs prior year.

• Fiscal year 2024 sales expected low double-digit decline. • Adjusted EBITDA expectation increased to $235 million to $250 million due to strong first half performance. • Capital allocation priorities: invest in plant expansions, digital transformation, automation; continue share repurchasing; deprioritize debt paydown in FY24.

• Macroeconomic factors like interest rates and housing affordability impacting new construction. • Lower in-store traffic and smaller projects affecting remodel demand. • Start-up costs of new operational locations in Hamlet and Monterrey with approximately $8 million impact in FY24.

Q: Could you go into more color on in-stock and made-to-order categories in R&R?

A: In R&R home center, both in-stock and MTO had negative trends, with MTO more severely impacted.

Q: On raised EBITDA guidance, is the second half outlook better?

A: Primarily due to first half performance; second half has uncertainty and start-up costs.

Q: Where do builder customers stand on affordability and home sizes?

A: Interest rates are bigger challenge; some rotation down in home size, but kitchen spaces still protected.

Q: How to think about third and fourth quarter comps?

A: Q3 likely similar to Q2; Q4 comps start to improve but still negative.