American Woodmark Reports Decline in Revenue and Profitability for Q3 Fiscal 2025

American Woodmark Corporation reported its financial results for the third quarter of fiscal 2025, revealing a decline in both revenue and profitability compared to the same period last year. For the three months ended January 31, 2025, the company generated net sales of $397.6 million, a decrease of 5.8% from $422.1 million in the prior year. Net income for the quarter was $16.6 million, or $1.10 per diluted share, down from $21.2 million, or $1.32 per diluted share, in the same quarter of fiscal 2024. For the first nine months of fiscal 2025, net sales totaled $1.31 billion, reflecting a 6.1% decrease from $1.39 billion in the previous year, while net income fell to $73.9 million from $89.4 million.

The company's gross profit margin also experienced a significant decline, dropping to 15.0% in the third quarter from 19.2% a year earlier, attributed to lower sales volumes and increased input costs for raw materials and labor. Selling and marketing expenses decreased by 11.0% to $19.5 million, while general and administrative expenses saw a substantial reduction of 40.1%, totaling $18.6 million, primarily due to the absence of amortization of customer intangibles and controlled spending. The effective income tax rate for the quarter was 16.0%, down from 25.4% in the prior year, benefiting from federal renewable energy tax credits.

Strategically, American Woodmark announced the closure of its manufacturing plant in Orange, Virginia, with expected pre-tax restructuring costs between $6.0 million and $8.5 million. The company recognized restructuring charges of $0.5 million for the quarter and $1.7 million for the nine-month period. The decision to close the plant is part of a broader effort to streamline operations amid challenging market conditions, including a decline in both the remodeling and new construction markets.

Operationally, the company reported a decrease in customer engagement, with remodeling sales down 2.3% in the third quarter and 8.8% for the first nine months. Builder sales also fell by 10.4% in the third quarter. As of January 31, 2025, American Woodmark operated 18 manufacturing facilities and had a total cash and cash equivalents balance of $43.5 million, down from $87.4 million at the end of the previous fiscal year. The company continues to focus on its digital transformation and automation investments while managing its debt levels, which stood at approximately $375.3 million.

Looking ahead, American Woodmark anticipates a mid-single-digit decline in net sales for fiscal 2025, driven by a softer repair and remodel market and reduced larger ticket remodel purchases. The company has adjusted its outlook for Adjusted EBITDA to a range of $210 million to $215 million, reflecting the impact of lower sales on manufacturing leverage. The management remains cautious about macroeconomic factors, including consumer sentiment and inflation risks, which could further influence the company's performance in the upcoming quarters.