AMWD Q1 Earnings Call: Revenue Below Expectations, Guidance Impacted by Tariff Uncertainty

Cabinet manufacturing company American Woodmark (NASDAQ: AMWD) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 11.7% year on year to $400.4 million. Its non-GAAP EPS of $1.61 per share was 13.4% above analysts’ consensus estimates.

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StockStory’s Take

American Woodmark’s first quarter performance was shaped by declining demand in both the new construction and remodel markets, as persistent uncertainty around tariffs and soft consumer confidence weighed on sales. CEO Scott Culbreth cited a broad-based, low double-digit decline across all channels, with new construction markets such as Florida, Texas, and the Southwest particularly affected. In contrast, the company’s Pro business managed a positive comparison against the prior year, supported by targeted product offerings. Management attributed the quarter’s margin performance to operational adjustments, including facility improvements and cost-saving initiatives, which partially offset higher input costs and fixed cost deleverage.

Looking ahead, management expects challenging demand conditions to persist, especially in the first half of the year, and highlighted significant uncertainty related to tariffs as a major driver of the company’s guidance. CFO Paul Joachimczyk stated that adjusted EBITDA projections account for potential tariff-related costs and modeled a wide range of recovery scenarios. CEO Scott Culbreth emphasized that removing tariff uncertainty would be critical, noting, “when we have day-to-day changes and impacts... projecting is challenging.” The company anticipates a gradual recovery in the second half of the year, contingent on improvements in consumer confidence and a possible reduction in mortgage interest rates to stimulate housing activity.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to weaker demand in core housing markets, tariff-related uncertainty, and cost pressures, while pointing to operational improvements and product innovation as partial offsets.

• Tariff and policy uncertainty: Ongoing uncertainty around tariffs created demand headwinds and complicated planning, as management modeled a variety of cost recovery scenarios based on evolving trade policies.
• Housing market softness: Declines in both new construction and remodel activity were tied to broader weakness in existing home sales and consumer hesitation, with specific regional declines in Florida, Texas, and the Southwest.
• Product mix and average order size: The company experienced an unfavorable mix shift in made-to-order offerings, as builders moved toward lower-priced options and reduced cabinet counts per home, impacting revenue and margins.
• Operational initiatives: Facility expansions in Monterrey, Mexico and Hamlet, North Carolina, as well as automation investments, contributed to improved manufacturing efficiency and are expected to generate ongoing savings.
• Digital transformation progress: Investments in cloud-based enterprise resource planning (ERP) systems, cybersecurity, and digital content tools have improved performance in digital channels and positioned the company to better serve home center partners and independent dealers.

Drivers of Future Performance

Management expects continued macroeconomic and policy-related headwinds, with tariff impacts, consumer confidence, and housing market trends as the primary factors shaping the outlook.

• Tariff impact and recovery scenarios: The company’s guidance for the year incorporates approximately $20 million in tariff-related costs, with a range of outcomes depending on policy changes and the ability to recover these costs through pricing or operational offsets.
• Housing and consumer sentiment: Future performance is closely tied to the pace of existing home sales and mortgage rate movements, as management believes higher housing activity and improved consumer confidence would create more opportunities for cabinet sales in both new construction and remodel markets.
• Cost inflation and automation benefits: Commodity and labor cost inflation are expected to persist, but management plans to mitigate these pressures through productivity improvements and continued automation investments, with initial projects already reducing labor needs and further savings anticipated from facility optimization initiatives.

Catalysts in Upcoming Quarters

In the quarters ahead, the StockStory team will closely watch (1) the resolution and policy direction of tariffs and their impact on cost recovery, (2) early indicators of a rebound in housing activity and consumer confidence that could lift demand, and (3) the realization of operational savings from automation and facility optimization. Progress in digital transformation and the company’s ability to respond to shifting customer preferences will also be important markers of execution.

American Woodmark currently trades at a forward P/E ratio of 9.4×. In the wake of earnings, is it a buy or sell? See for yourself in our full research report (it’s free).

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